How retailers can win more revenue from overseas consumers

THE RULES OF ATTRACTION:

The UK is a brand bazaar for global consumers

Global shoppers spend around four times more than locals at high street retailers (Global Blue based on transactions since 1980)

30% of Burberry’s London store sales are to overseas visitors

DID YOU KNOW?

30%

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.

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)

Global growth of tax-free amount spent in 2012

Incr

ease

ove

r 50%

Chin

a

Incr

ease

ove

r 30%

Mal

aysi

a, S

inga

pore

, Tha

iland

50 %

Incr

ease

ove

r 20%

Japa

n, R

ussi

a, U

SA

30 %

20 %

SIZE OF THE PRIZEBy o�ering tax free shopping to your customers, you o�er them better value with no e�ect

advantage in a domestic market that is hugely promotions-driven.

While some retailers have some sort of o�er for tax free shopping to attract lucrative global consumers into store, most are still not o�ering 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 o�set the tax, but may still want to pay in their local currency.

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

Americans.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.

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

USA

China

Indonesia

Bahrain

THE TAX-FREE WORLDTax 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’s top 3 categories of goods by amount spend

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 bargain-hunting tourists.

ST ND

China

Qatar

875

£1,299

778

£1,080

485

£588

31 %

29 %

23 %

Others 17%

765

£850

532

£712

640

£737

Malaysia

UAE

Thailand

Saudi Arabia

Market

Market

Department Stores

Fashion & Clothes

Watches & Jewellery

Middle Eastern• Shopping is the favourite

activity of visitors from United Arab Emirates with 56% including shopping on their trip

• 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

Chinese• Around half of Chinese holiday

visitors to the UK go shopping

• 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 nothave a credit card so manyshoppers use cash

Russian• Russians particularly like brands

and are prepared to pay but expect high service standards

• 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

Source: Global Blue

UNDERSTANDING THE GLOBAL SHOPPERDi�erent nationalities respond to di�erent selling techniques. Store sta� 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 o�end 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.

Good for retailers

A valuable source of revenue that is not price-sensitive, enabling retailers to earn the full margin

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

They increase spend – a well-managed tax free service will encourage them to visit more often and spend more

Enables retailers to support investment in stores and stock even when local demand is depressed

HOW TO BETTER SERVE THE GLOBAL SHOPPER

Store sta� who speak several languages*

Brand heritage and culture should be communicated

In-store signage that has been translated

Training for sales sta� in the expectations of di�erent cultures

Accessible information on

tags displaying both prices

myCurrencyPersonal shopping servicesReaching out to consumers in advance with information

on brands, store location

International sizing labelling

Special services for big spenders – delivery, taxi,

refreshments etc.

* Department stores like Selfridges now employ dozens of Mandarin-speaking sta�.

Hello

RETAILERS CAN OFFER A RANGE OF SERVICES TO GLOBAL CONSUMERSThe 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 allowthem 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 mobilePOS – payment methodsthat 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 o�ered 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

and sta� training, combined with the customer service bene�ts makes myCurrency a compelling service for us’Arcadia

than a source of income. The simple IT implementation

WHAT TO DO NEXTWhile 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 o�er 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.

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

“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

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.”

WorldPay myCurrency is a convenient service that gives international cardholders the choice to pay for goods and services in their local currency.

Worldpay.com

• 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.

Background to WorldPay