The renaissance of Tax Free in Europe thanks to Chinese travelers

18-03-24

Chinese tourists are powering a significant resurgence in tax-free shopping across Europe and Asia, as reported by Global Blue, a company specializing in tourism shopping tax refunds. Following a four-year lull, tax-free shopping is now rebounding strongly, reaching levels comparable to those before the pandemic. According to Global Blue, tax-free shopping's global recovery saw a dramatic increase in February, achieving 141% of its pre-2019 figures, marking a significant resurgence in international retail activity.

Global Blue's analysis highlights the crucial role of China and its outbound tourists in driving the recovery of the tax-free shopping sector post-pandemic. With Continental Europe and the Asia-Pacific region at the forefront, the influence of Chinese tourists is unmistakable. The resurgence is especially pronounced in the Asia-Pacific, led by Japan and buoyed by Singapore's recent introduction of a visa-free policy for Chinese travelers. In February, tax-free purchases by tourists from mainland China neared 98% of their 2019 levels, signaling the return of Chinese tourists to the international shopping scene after years of preference for domestic travel and shopping.

The year-on-year growth in tax-free shopping, driven primarily by tourists from mainland China, has been remarkable, with a 222% increase in Continental Europe and a staggering 350% in the Asia-Pacific. These figures not only denote a robust recovery but also suggest a significant shift in consumption patterns, likely fueled by accumulated demand and a strong desire for luxury goods and international travel experiences.

In February, spending growth in the Asia-Pacific surged by 120% over the previous year, with mainland Chinese consumers leading the charge with a 350% increase in spending compared to February 2023. This was followed by tourists from Northeast Asia and those from Hong Kong and Taiwan, who also contributed to the spending surge with increases of 118% and 54%, respectively.

Despite a slight decline to 71% of pre-pandemic levels in February's recovery rate among mainland Chinese shoppers in Continental Europe, Global Blue suggests that this decrease is less significant than it appears, especially when considering the high baseline set by Lunar New Year spending in 2019.

The revival of tax-free shopping, predominantly driven by mainland Chinese consumers, presents a unique opportunity for luxury brands and retailers to reconsider and adjust their strategies. This involves emphasizing personalized services, recognizing regional preferences, and incorporating digital solutions to enrich the shopping experiences of Chinese luxury consumers.

Furthermore, as Chinese consumers increasingly partake in international shopping, there is an evident need for brands to offer more bespoke, culturally relevant experiences, catering to the sophisticated preferences of this key demographic.