Rules of Attraction - how retailers can get the most from the global shopper


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A helpful guide for UK retailers. How to get the most from the global shopper. Clearly written. Helpful tips. Plenty of facts. Short case studies from Arcadia and Selfridges.

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Rules of Attraction - how retailers can get the most from the global shopper

  1. 1. THE RULES OF ATTRACTION: How retailers can win more revenue from overseas consumers
  2. 2. DID YOU KNOW? Critical to success is how retailers manage this valuable source of revenue for both themselves and their consumers. These consumers are coming from both established and emerging economies, and their thirst for well-known brands far outstrips local demand. Demand is strong: Retail prices of many luxury goods are 30% higher in China than in Europe (China Daily) 30 % 30% of Burberry’s London store sales are to overseas visitors 20 Global shoppers spend around four times more than locals at high street retailers (Global Blue based on transactions since 1980) % % % Increase over 30% Malaysia, Singapore, Thailand 30 50 Increase over 50% China Tax free shopping, which allows consumers from outside the European Union (EU) to claim back the VAT on their shopping, is a valuable source of both indirect and direct revenue. Increase over 20% Japan, Russia, USA The UK is a brand bazaar for global consumers Global growth of tax-free amount spent in 2012
  3. 3. SIZE OF THE PRIZE The Chinese account for almost 20% of non-EU international spending in the UK, and the average trip lasts about 13 nights. VisitBritain Every year 150,000 Chinese tourists come to the UK - and at Harrods they now spend By offering tax free shopping to your customers, you offer them better value with no effect Americans. While some retailers have some sort of offer for tax free shopping to attract lucrative global consumers into store, most are still not offering the full range of value added services such as myCurrency , a dynamic currency conversion (DCC) solution that will attract higher footfall and higher spend, particularly for those customers who may be from within the EU and cannot offset the tax, but may still want to pay in their local currency. The Telegraph The World Tourism Organisation says the number of Chinese tourists travelling abroad increased from 10 million in 2000 to 83 million in 2012. About half of them spend more than £3,000 a trip and account for 25% of sales of luxury goods around the world, giving them considerable economic clout. advantage in a domestic market that is hugely promotions-driven. Don’t miss the boat You need services that are: • Easy and convenient for you and your customers • Able to give you insight into where the money and opportunities are • Seamless across multiple payment methods and devices • Secure (Payment Card Industry Data Security Standards [PCI DSS] compliant) Here’s how … 83 million
  4. 4. THE TAX-FREE WORLD Tax free shopping is not just about luxury. It is growing fast outside the traditional high-value and souvenir categories. Shopping is becoming global, with demand for brands at all price levels coming from all over the world. Strong British brands, such as shoe retailer Clarks, often command a price premium abroad and are much more in demand in the UK where prices are much lower. British brands such as Burberry, Mulberry or Barbour and Church’s shoes, all carry a strong British heritage. Top 5 globe shopper nations by Average Spend in Euros China 778 Thailand Watches & Jewellery 765 Indonesia Market ST 875 Malaysia USA China’s top 3 categories of goods by amount spend 640 31 % 532 485 Fashion & Clothes ND Top 5 UK globe shopper nations by Average Spend London is the second most valuable tax free destination after Paris, by amount spent. And while London attracts a huge proportion of tourist spend, other UK cities Bath are all popular, and Bicester Village in Oxfordshire has become a key destination for bargainhunting tourists. Qatar £1,299 UAE £1,080 Saudi Arabia Bahrain China Market 29 % £850 Department Stores 23 % £737 £712 £588 Others 17%
  5. 5. UNDERSTANDING THE GLOBAL SHOPPER Different nationalities respond to different selling techniques. Store staff need to be aware of cultural anomalies. For instance, Americans demand attention and personal service, and expect to be ‘sold to’. Chinese people like a friendly approach and don’t like to be kept waiting. It is easy to offend Middle Eastern consumers by asking questions deemed too personal, or using the wrong hand gestures. For instance, ‘thumbs up’ is considered to be an obscene gesture. Middle Eastern Chinese Russian • Shopping is the favourite activity of visitors from United Arab Emirates with 56% including shopping on their trip • Around half of Chinese holiday visitors to the UK go shopping • Russians particularly like brands and are prepared to pay but expect high service standards • Present-buying for friends and family is a cultural norm, and VIP treatment is popular • 82% of UAE travellers are aged 25 to 54, and 66% are male • Consumption rises sharply just before and after Ramadan, which usually occurs anywhere between mid-July to early September Source: Global Blue • Luxury branded goods in UK stores are guaranteed not to be fake so are popular purchases • under the age of 46 with 22% under 30 • Many Chinese visitors do not have a credit card so many shoppers use cash • 60% of Russians shop when visiting the UK • The Russian luxury traveller is typically a young businessman, with an average age of 44 • If money was no object, 38% of Russians would choose Christian Dior, followed closely by Versace and Prada • Russians respond well to politeness, willingness to help and attention
  6. 6. TAX FREE SHOPPING IS: Good for your consumers They win twice – by getting the discount on brands that are otherwise more expensive in their home country; and, saving on the tax. Combined, this can make their purchases up to 50% cheaper Good for retailers They increase spend – a well-managed tax free service will encourage them to visit more often and spend more A valuable source of revenue that is not price-sensitive, enabling retailers to earn the full margin Enables retailers to support investment in stores and stock even when local demand is depressed
  7. 7. HOW TO BETTER SERVE THE GLOBAL SHOPPER Store staff who speak several languages* In-store signage that has been translated Brand heritage and culture should be communicated Training for sales staff in the expectations of different cultures Hello Special services for big spenders – delivery, taxi, refreshments etc. International sizing labelling Accessible information on tags displaying both prices Reaching out to consumers in advance with information on brands, store location * Department stores like Selfridges now employ dozens of Mandarin-speaking staff. Personal shopping services myCurrency
  8. 8. RETAILERS CAN OFFER A RANGE OF SERVICES TO GLOBAL CONSUMERS The process of reclaiming tax paid at the point of departure, usually an airport, is relatively onerous, governed as it is by UK HMRC. Anything the retailer can do to make the end to end process simpler and less time-consuming for the traveller, is going to increase their popularity as a destination for shopping. The paperwork should be made as simple as possible for the consumers. This will allow them to see exactly what they are paying when they compile their expense reports. The consumer’s sales receipt should show: • Cost of goods in the store’s pricing currency • Equivalent cost in the local currency* • Applied exchange rate • Source of exchange rate • Margin applied Consumers should also be able to pay through multiple devices and services – traditional Point Of Sale (POS), kiosks, and mobile POS – payment methods that they are increasingly comfortable with and demanding. myCurrency is a revenue opportunity for merchants. myCurrency enables visitors to choose whether to pay in their card currency or the local currency. Rather than the bank getting the currency conversion commission once the consumer returns home, myCurrency revenues are shared between the merchant and the acquirer providing the service. Retailers can guarantee that, through myCurrency, the consumer is offered best or better than market exchange rates; and the chance to get a refund if it’s not. ‘We primarily see myCurrency as a way of improving the experience for customers, rather than a source of income. The simple IT implementation and staff training, combined with the customer service benefits makes myCurrency a compelling service for us’ Arcadia
  9. 9. WHAT TO DO NEXT While most retailers are able to provide a service to consumers who want to get the tax back on their purchases, relatively few are able to offer the range of services that will make their stores a hub for global shoppers. As this guide shows, global consumers expect a service that removes as much of the hassle as possible. Shopping should be an exciting and rewarding experience, as much a part of their trip as visiting tourists sites or doing business. By sourcing the complete range of payment services from a single acquirer, retailers reduce both costs and management overhead, as well as earning valuable revenue from myCurrency , and getting insight into consumer buying patterns that will enable them to plan for the future.
  10. 10. CASE STUDIES Arcadia, with 2,500 fashion and general merchandise stores in the UK, has been using myCurrency for over two years and the service has proved both popular recommend myCurrency to other retailers. It has allowed us to add real value to our foreign customers by making the cost of any purchases they make in store completely transparent. They no longer have to wait out how much something has cost and, because we guarantee them the best rate, we often save them money as well.” “Since the introduction of China Union Pay terminals in our stores, we have seen footfall of Chinese visitors and the amount of money they spend, particularly on our luxury brands.” Meave Wall, Director, Selfridges
  11. 11. Background to WorldPay WorldPay myCurrency is a convenient service that gives international cardholders the choice to pay for goods and services in their local currency. • UK market leader in payments • Championing the interests of our customers • 24/7 service from UK-based contact centre • Supporting Omni-channel retailing We are the UK market leader in payments with £275bn of transactions a year.