Gilets Jaunes protests Paris Fashion Week Men's Fall 2019

PARIS High spenders helped make Paris the European capital of luxury spending in 2018, though activity fell off sharply in the fourth quarter due to the ongoing yellow vests protests, Global Blue said on Tuesday.

Total tax refunds rose 2 percent in France last year, compared with declines of 12 percent in Germany, 7 percent in the United Kingdom and Italy, and 5 percent in Spain, the shopping tax refund firm said in a presentation at its VIP lounge in Paris.

“It could have been slightly better, were it not for the gilets jaunes,” said Mathieu Grac, vice president, intelligence strategy at Global Blue. “We lost between 1 and 2 percentage points of growth with globe shoppers.”

The impact is carrying through into the first quarter of 2019, with travel bookings dropping sharply since the antigovernment protests began on Nov. 17. Global Blue expects the level of transactions to fall by 4 percent between January and March, mainly due to a reduction in visitors from the Middle East.

Tourist spending last year remained below its level in 2015, when France was hit by a series of terrorist attacks. Nonetheless, international travelers spent an average of 2,148 euros on luxury goods in France, the highest level in Europe, for a total of roughly 6 billion euros in tax-free spending.

“Paris is the driver of French activity, and the increase is coming not from traffic, but from the average basket in Paris. This means we’re seeing a real premiumization of the offer, but also a premiumization of the clientele,” Grac said, noting the arrival of more upscale stores on the Avenue des Champs-Elysées, for example.

“Today, France is the only country that is seeing an increase in spending from tourists from China, the U.S. and the Gulf nations,” he added, noting that France was also the only country to be immune from the slowdown in Chinese spending registered across Europe from October 2018.

This was largely due to the disproportionate amount of elite travelers in France, defined by Global Blue as having spent at least 40,000 euros over the last 24 months. They represented 2.1 percent of visitors in France, versus 1.4 percent in the U.K. and Italy, its closest competitors.

“Luxury brands are behind the differentiation of France, and one out of two global shoppers coming to France today are buying a handbag,” said Grac.

Chinese elite travelers, for instance, represented just 2.9 percent of total visitors from Mainland China, Hong Kong and Macau, yet accounted for 26.9 percent of their total spending, with an average basket of 25,618 euros in 2018.

Similarly, top spenders accounted for just 5.8 percent of visitors from the Middle East, but represented 38.7 percent of the total spend from that region. Among elite travelers, Americans were the biggest spenders, with an average basket of 28,001 euros, the study found.

“Whereas American visitors used to come mainly for the cultural aspect, we are seeing an increase in very wealthy U.S. customers who are coming to shop, so that is changing the paradigm a little,” said Grac, noting tax-free shopping is now growing faster among Americans than among the Chinese.

In addition to the strong dollar, there were unexpected factors driving tourism from the U.S. “There was a spike in bookings after Jay-Z and Beyoncé released their video shot at the Louvre,” he said.