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The spending power of the Chinese traveller

4th March 2013

Over one million Chinese travellers visited EC countries last year. Global Blue, the VAT refund people, report their average transaction value in the UK at £712, doubling to £1,310 for spending in London's West End according to NWEC - twice as much as other international visitors and ten times the expenditure of British shoppers. This attraction is amplified by the appeal of buying luxury goods in their home markets with the guarantee of authenticity, further stimulated by a weak Pound and the ability to avoid 30+% luxury taxes in China.

Forward thinking retailers, like department stores Harrods and Selfridges and the prime designer stores in Bond Street, have taken steps to capitalise on this spending power by ensuring the best possible ‘package' for Chinese visitors. They understand the importance of providing the most appealing brands (not just any old designer brand), the right sizes for Chinese shapes, the right retail environments, and of course, Mandarin-speaking sales assistants and Chinese signage. Some have even gone the further step of introducing card readers accepting UnionPay - China's equivalent to MasterCard or Visa - which has resulted in a 40% rise in sales to Chinese tourists at Harrods.

In Pragma's Airports division, we have long known the unique opportunity afforded by the Chinese traveller. At Heathrow, they account for just 1% of the passenger mix, but 25% of total luxury spend - the Chinese have overtaken US shoppers to become the world's biggest buyers of luxury goods. Milan's Malpensa airport used customer insight to align its retail offer to target key Chinese passenger segments. It was thus able to offer more of the key desirable brands, resulting in a retail sales uplift whereby expenditure of Chinese travellers was 4.6 times higher than the average.

At Pragma we have extensive experience of conducting such passenger insight research to gain an in-depth understanding of an airport's passenger mix which informs our airport concession planning and sales forecast modelling work. Creating such a bespoke mix for individual airports, terminals and even areas within terminals, increases both spending and passenger satisfaction. And as we all know....a satisfied customer is a profitable customer.

Christina Roseler, Analyst, Airports and Commercial Spaces Division

Did you know?

Europe's largest shopping centre is Westfield in Stratford, which has 300 shops and restaurants.