Despite fears of an economic slowdown in China, the devaluation of the yuan, and stock market turmoil making headlines throughout January, market research firm GfK has forecast the number of Chinese people travelling abroad is set to grow after revealing 109 million Chinese travelled abroad in 2015.
The aforementioned factors have raised questions around the demand for luxury goods among Chinese consumers in 2016, however, intelligence from retail tourism experts Global Blue indicates the appeal for UK travel is still rife, with Chinese New Year (8-14 February 2016) — Year of the Monkey — celebrations set to kick-off 2016 on a positive note for international spend.
The event has boosted optimism among retailers who are anticipating a slower February, according to Global Blue, but the strength of the pound means UK brands must market more aggressively to capture demand over European neighbours.
In fact,Global Blue’s Tax Free Spend Index 2015 revealed spend by Chinese shoppers in the UK slowed to just +1% year-on-year in 2015. Despite this, China maintained its position as the top international tax-free spending nation for the UK overall representing 24% of total spend and with individuals spending £742 per transaction, indicating their continued desire for British brands.
This trend is set to continue as online travel service, Ctrip has reported more than 60% of Chinese travel overseas for Chinese New Year and UK tour operators have forecast that bookings will continue to grow throughout the first half of 2016 as the shift to summer travel becomes a trend for these visitors.
Gordon Clark, Managing director UK and Ireland at Global Blue said: “Chinese New Year is still a key period for UK retail, proven by the rise of +72% YoY for the Chinese New Year period in 2015. The new two-year visa for Chinese visitors to the UK, which launched in January following a campaign by the UK China Visa Alliance, an initiative Global Blue joint-founded, offers a boosted incentive for shoppers to visit the UK this Lunar New Year over Paris or Milan.
“However, UK brands must not be complacent and should focus on strategies and marketing campaigns executed in China that talk about their brand heritage, location of their stores, quality of their produce range and any special services they can offer these customers. By doing so they will be able to entice this integral market to the UK to shop and stay, despite the strength of the pound and China’s faltering consumer confidence to travel and spend abroad.”
According to China Luxury Advisors, the majority of Chinese travellers are now millennials with rising income; this group cannot be ignored by UK retailers of both high street and luxury brands with their growing appetite for luxury goods and experiences and strong social media presence.
Philip Guarino, European director at China Luxury Advisors said: “Continuing economic growth in China and the shift towards value as opposed to ‘bling’ will inevitably fuel great opportunities for affordable luxury purchases. Furthermore, as Chinese tourism to the UK continues to surge amidst a more flexible visa regime and a lower British Pound, those brands that are “China-ready” can expect a significant boost in sales this Lunar New Year.”
Kim Urbaniak, Marketing manager of Global Blue, added: “Luxury brands should not underestimate the fast changing behaviours and preferences of millennial travellers. UK luxury brands can look to social media to maximise engagement around Chinese New Year. Sharing on social media and partnering with key online influencers is central to any overseas travel experience for young Chinese travellers and an opportunity that luxury brands are yet to fully leverage.”