Travellers Spend More On Luxury Items Abroad Than In Native Countries, Study Shows

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An Asian shopper walks past a Louis Vuitton window at Printemps department store in Paris. ― AFP pic
An Asian shopper walks past a Louis Vuitton window at Printemps department store in Paris. ― AFP pic

Travellers purchasing luxury goods abroad account for around 30% of worldwide revenues, according to a study produced by customer engagement specialist Contactlab in conjunction with Exane BNP Paribas.

The report highlights how travellers spending patterns are shaping the luxury brands industry and why retailers need to use this opportunity to engage with tourists during the busy summer period.

Massimo Fubini, CEO of Contactlab, said: “Summer is on the way and many people will be going abroad to their favourite destinations. Luxury brands need to leverage this opportunity in order to get in front of these tourists to influence their shopping decisions. Luxury travellers account for around 50-80% of heritage countries’ revenues. Luxury brands are being gifted with customers from abroad who are adding an additional stream of revenue to their domestic customers, which should not be ignored.”

Most “new economies” have around 30-40% of clients buying luxury goods abroad, with the exception of Russia which has travellers who spend around 70% abroad. The report focuses on the purchasing habits of tourists in different countries such as Russia, China, Taiwan, India, Brazil, and Mexico. One factor which influenced the revenue each country received from these tourists was based on the number of traveller going out of the country vs those coming in. For example, the UAE/Gulf region had a balance outflow/inflow of luxury travellers. The Gulf region is uniquely positioned with very significant luxury travellers’ coming into the country from Far-East/Russia and an outflow to Europe.

Russian, Brazilian, Chinese travellers generally spend more abroad, the study found. American and Japanese have balanced outflows and inflows, and have prevalence of domestic clients. European countries seem more conservative, with a very low outflow of money for luxury shopping but a very big inflow from luxury travellers. Many travellers visited “heritage countries” such as Italy, France and Spain due to factors such as their luxury heritage, tax differential and close-to-parity Euro-Dollar FX.

According to the Contactlab-Exane report, Chinese travellers are still dominant and stable, accounting for around 50% of total travellers. In comparison, Russian and Brazilian travellers’ overseas spending decreased whilst US, Korean and Taiwanese abroad purchases continued to increase.

Fubini said: “Overseas spending is carving a big share of the revenue for luxury brands. The choice for spenders to purchase both in their home countries and abroad opens up avenues for brands to explore, but they need to ensure they are able to recognize their clients to offer them a real value wherever they are.”

By Fiona Briggs Courtesy Forbes

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