Mar 27, 2023
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UK Gen Z shoppers embrace VAT-free EU spending post-Brexit

Mar 27, 2023

The UK may have failed to offer the hoped-for Vat-free shopping for EU tourists post-Brexit, but British tourists are taking advantage of their ability to shop tax-free within the EU, and Gen Z is leading the charge.

Photo: Pexels

That’s according to Planet, the global payments technology specialist, which said that “British shoppers continue to be among the top five nationalities when it comes to tax-free spending abroad”.

It added that Gen Z accounted for “a staggering 29% of sales in February 2023, compared to just 8% for other non-EU shoppers”. And they make up “over 30% of the share of spending across categories like luxury, department, and watches & jewellery stores”.

In fact, those youthful British luxury tourists are especially interested in watches & jewellery with an 11% share compared to just 3% for other non-EU shoppers. 

There are differences across markets. The February figures showed that UK tourists had the highest average transaction value (ATV) of €2,740 in Portugal, outpacing other non-EU shoppers. But France remains the most preferred destination for Britons, although their ATV in the country remains below average.

But of course, the UK isn’t the only country with consumers who love to shop abroad. 

Planet also said its data demonstrates that Europe’s tax-free shopping market “is experiencing a shifting landscape, with Asian tourists making an ever more powerful impact”.

Chinese consumers stood out in February as that country flexed its spending muscle again after years of Covid travel restrictions. Chinese travelling s hoppers had an average transaction value of €1,415, making them a prime target for retailers. Similarly, tourists from Taiwan have shown an impressive average transaction value of €1,368.

The US remains a key source country for European shoppers with a 14.9% share of in-store sales, underlining its ongoing importance for tax-free shopping in Europe. 

However, UAE tourists have also shown significant spending power, with an average transaction value of €1,611, higher than that of both US and Asian tourists.

This also feeds into another fact that emerged from the Luxurynsight report as it said that Middle Eastern tourists in general have become more important over the last year.

That said, an expected influx of Chinese tourists this summer “will be a potential opportunity for change and is likely to reduce the dominance of the US as a source market,” Planet said.

It added that with the recent UK Budget not taking the opportunity to reintroduce a VAT-free shopping scheme in the UK, “the country risks missing out on the full spending power potential of the returning Chinese tourist”.

Luca Cassina, President of Retail at Planet said: “Despite widespread calls from the industry, we’re disappointed the recent Budget did not include the reinstatement of a tax-free shopping scheme for overseas visitors. It’s a missed opportunity ahead of the start of the international tourist season to raise an additional £350 million for the Treasury each year, and to provide a major boost to the UK’s struggling retail sector.

“As we head into the peak Summer months for international travel, the UK retail industry was hoping to benefit from the boost to international spending emanating from what’s likely to be the first restriction-free travel season in four years.

“It’s not just the full spending power of US visitors that UK retailers will continue to miss out on due to a lack of a digital Tax Free shopping scheme, but also returning high spending Chinese tourists too. We know from our research that almost seven out of 10 Chinese consumers would be more likely to visit the UK if a tax-free shopping scheme were to be available.”

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