The Power of Globe Shopping in 2014 - Global Blue
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Globe shoppers are international tourists for whom shopping is a fundamental part of their travel experience. The advent of this new market segment has changed forever the face of retail and luxury, with a global business volume representing more than 48 bn Euros in 2013 just in Europe, Singapore, South Korea and Japan. Globe shoppers are a more powerful force than the Chinese market alone according to retail and luxury experts.
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The Power of Globe Shopping in 2014 - Global Blue
- 1. UNDERSTANDING THE UHNW CONSUMER LONDON, June 14 Manelik Sfez @GlobalBlueBiz
- 2. UNDERSTANDING THE UHNW CONSUMER LONDON, June 14
- 3. UNDERSTANDING THE UHNW CONSUMER LONDON, June 14
- 4. UNDERSTANDING THE UHNW CONSUMER LONDON, June 14
- 5. The power of globe shopping UNDERSTANDING THE UHNW CONSUMER LONDON, June 14
- 6. globe shop∙per /ˈglōbˌSHäpər/ noun 1. a person who considers shopping as a fundamental part of their travel experience. “globe shoppers are the sixth continent for the retail industry”
- 7. noun 1. a person who considers shopping as a fundamental part of their travel experience. “globe shoppers are the sixth continent for the retail industry” 2. a fast-growing retail market segment, which global worth was estimated at more than EUR 48 billion in 2013. “building growth from globe shoppers – the world’s most valuable customers.”
- 8. glob /ˈglōbˌS noun 1. a per funda “glob the r 48% 56% 82% Russians Mid-Easterns Chinese “Shopping is my priority when I travel” Source:GlobalBlue
- 9. “g th 2. a f wh th “b wo40% 60% Share of sales for luxury brands Domestic shoppers Globe shoppers
- 10. Jean-Paul Agon “Travel Retail is a key channel for winning over one billion new consumers; it is present around the world as a sixth continent.”
- 11. Where do they come from?
- 12. 27% 17% 4%3%3% 46% JAN-DEC 2013: top 5 globe shopper nations by share of total spent China Russia Indonesia USA Japan Others Source: Global Blue Analytics
- 13. 22% 20% 5%4%3% 47% JAN-APR 2013: top 5 globe shopper nations by share of total spent China Russia Indonesia Japan Thailand Others 27% 17% 3%3%3% 47% JAN-APR 2014: top 5 globe shopper nations by share of total spent China Russia Indonesia USA Japan Others Source: Global Blue Analytics
- 14. Angela Ahrendts “Investors should switch their focus from China to the TLC (Travelling Luxury Consumers), a more powerful force than the Chinese market alone.”
- 16. 18% 16% 15%12% 11% 27% JAN-DEC 2013: top 5 destination countries by share of total spent France Italy UK Germany Singapore Others 18% 16% 16%12% 12% 27% JAN-APR 2014: top 5 destination countries by share of total spent France UK Italy Singapore Germany Others Source: Global Blue Analytics
- 17. How much do they spend?
- 18. € '815 € '647 € '608 € '509 € '501 € '356 China USA Indonesia Japan Market Russia JAN-DEC 2013: average spend of top 5 globe shopper nations € '870 € '846 € '648 € '514 € '502 € '358 Thailand China Indonesia Japan Market Russia JAN-APR 2014: average spend of top 5 globe shopper nations Source: Global Blue Analytics
- 19. Source: Global Blue Dossier “The growing complexity of the Chinese globe shopper”
- 20. Welcome to the new normal
- 21. Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Ja 2012-2014: year-on-year growth rate of Chinese total spend 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% -20% -30% -10% Source: Global Blue Analytics
- 22. 2 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec 2012-2014: year-on-year growth rate of Chinese total spend 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% -20% -30% -10% Source: Global Blue Analytics
- 23. -13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 2012-2014: year-on-year growth rate of Chinese total spend 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% New tourism law -20% -30% -10% Source: Global Blue Analytics
- 24. Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan 2012-2014: year-on-year growth rate of Russian total spend 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% -20% -30% -10% Source: Global Blue Analytics
- 25. 12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 De 2012-2014: year-on-year growth rate of Russian total spend 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% -20% -30% -10% Source: Global Blue Analytics
- 26. 13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 2012-2014: year-on-year growth rate of Russian total spend 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% -20% -30% -10% Crimean crisis Source: Global Blue Analytics
- 28. - 25 50 75 100 125 150 175 200 225 Milliontravellers Chinese outbound travel growth 2002-2020 Source: Global Blue based on CNTA, Xinhua, UNWTO
- 29. Middle-class households in China by 2020 (MasterCard)
- 30. The Chinese spending slowdown Not related to outbound travel New tourism law Anti-corruption storm Full stop of official travel Destination shift to USA / Australia Change in travel purpose Rise of FIT / decline of groups Impacted W&J, boosted F&C
- 31. Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan 2012-2014: year-on-year growth rate of Chinese spend on Watches & Jewellery 140% 120% 100% 80% 60% 40% 20% 0% -20% -40% Source: Global Blue Analytics
- 32. 12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Ja 2012-2014: year-on-year growth rate of Chinese spend on Watches & Jewellery 140% 120% 100% 80% 60% 40% 20% 0% -20% -40% Source: Global Blue Analytics 18th National Congress
- 33. 3 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 2012-2014: year-on-year growth rate of Chinese spend on Watches & Jewellery 140% 120% 100% 80% 60% 40% 20% 0% -20% -40% Source: Global Blue Analytics
- 35. The Russian spending slowdown Rouble has been falling for a year Russian spending down 8.5% in 2014 Economy was hit before the Crimean crisis Crimean crisis impacts spending, not travelling Outbound travel still steadily increasing 5% Frankfurt and Milan mostly hurt in March
- 36. What can we expect for the future?
- 37. In 2014 we expect stronger tourist arrivals in APAC (and USA) than in Europe
- 38. Nation 2014 2015 2016 China 13% 13% 13% Russia 9% 13% 15% Japan 2% 3% 3% Indonesia 8% 8% 9% USA 2% 2% 2% General outbound travel Europe-bound travel Nation 2014 2015 2016 China 6% 9% 7% Russia 5% 7% 6% Japan 0% 0% 0% Indonesia - NA - - NA - - NA - USA 2% 2% 2% Source: Global Blue based on CNTA, Xinhua, Euromonitor, TTG Asia, Jakarta News, Tourism Economics, UNWTO, PATA, TourMIS.
- 39. Travel growth from core markets still positive, with a stress on APAC Major globe shopper currencies to strengthen against EUR and SGD A better economic outlook, yet with downside risks Rise of middle-class in China, but with travel ban for officials and new tourism law
- 40. Globe shoppers are a demographic, not a geography.
- 41. Is your company structured to harness their power?
- 42. Thank you.
Hinweis der Redaktion
- Good afternoon; It’s now more than 7 years that I travel the world to talk about globe shoppers, since at Global Blue we first identified and formalized the theory of this fast-growing consumer segment. And today globe shoppers are truly everywhere! I was sitting next to a Russian businessman this morning on the plane from Geneva, and he told me he just attended an auction in Geneva yesterday and was now heading for a shopping spree in London. Actually he seemed pretty unhappy about his stay in Geneva, and so I asked what was the matter: “Can you imagine that I got cheated out of a vase? I paid 50,000 dollars at the auction for a Ming vase for the office, and it turned out, darn it, that the vase was made in China!”
- In most of the recent history shopping has been viewed as a laborious or functional activity at its best, one that most often must be undertaken as a means of survival. >> CLICK For the vast majority of the society, ‘purchasing goods from stores and market stables’ rarely, if ever, possessed qualities that could be considered enjoyable. But times changed and the modern phenomenon of shopping actually emerged with the consumer society in the 18th century. The development accelerated during the past century and shopping clearly became less of a utilitarian chore and more of a free-time activity to be undertaken as a pleasant pursuit or, at least, containing some elements of pleasure. >> CLICK
- The phenomenon accelerated to such extend that by the end of the 1980’s, as rising prosperity and social mobility increased the number of people with disposable income for consumption, shopping had become the leading free time and leisure activity in Europe and the US. At that time international tourism went through a similar evolution, also driven by the rise in prosperity and social mobility. This increased people’s disposable income and free time, and that international travel became a popular global leisure activity on the back of cheaper air and sea mass transport. Travel and shopping both became common leisure activities, and tourists treating themselves with luxury items overseas represented an important customer for brands, merchants, and hotels. The 80’s and 90’s saw the domination of American and Japanese tourists here in Europe, but even if the luxury industry cherished them and considered them very important clients it was a drop in the ocean compared to the developments to come after 2005. >> CLICK
- The late 90’s actually saw a turning point with the development of the Internet. It had a considerable impact on what John Hill calls a ‘shift toward a more integrated and interdependent world economy’ in his book ‘Managing Globalization’. The Internet supported the movement toward a global village with cheaper, faster and easier means of communication and the provision of a vast pool of information. It is commonplace today to think that the web enabled the expansion of e-commerce, but it truly did have a massive impact on traditional commerce and stores on the high street too. Actually the real impact of e-commerce was on international tourism, as today tourism products are one of the most traded items on the Internet. >> CLICK The Internet created a global audience that was all of a sudden just a few clicks away from cultures, products, prices, stores, brands, fashion, and events that until then were on the other side of the world. All of a sudden tourists could discover, browse, compare, select and plan remotely, integrating this information into their travel project in an easier and more educated way than ever.
- >> CLICK And this is why by the late 1990’s when the East and the BRIC economies started to rise, both the super-rich and the upper middle-class from Russia, China, and more recently Indonesia or Thailand, started to creep over developed countries in a quest for luxury as a means to take the Western culture for themselves. This phenomenon climaxed after the global financial crisis in 2008, and when China’s economy skyrocketed between 2008 and 2012.
- This is how the world would witness the advent of a new market segment that would change forever the face of retail and luxury. It was embodying our society’s irresistible globalization and bringing unprecedented opportunities for growth. We were the first to identify and define this new, fast-growing market segment of travelling retail customers. At Global Blue we called them the globe shoppers, international tourists for whom shopping is a fundamental part of their travel experience. >> CLICK They represent, at the very least and if you only take into account major luxury shopping destinations such as Europe, Singapore, Seoul and Japan, but exclude Hong Kong, Dubai and the US, a market worth more than 48 bn Euros in 2013. >> CLICK
- This is how the world would witness the advent of a new market segment that would change forever the face of retail and luxury. It was embodying our society’s irresistible globalization and bringing unprecedented opportunities for growth. We were the first to identify and define this new, fast-growing market segment of travelling retail customers. At Global Blue we called them the globe shoppers, international tourists for whom shopping is a fundamental part of their travel experience. >> CLICK They represent, at the very least and if you only take into account major luxury shopping destinations such as Europe, Singapore, Seoul and Japan, but exclude Hong Kong, Dubai and the US, a market worth more than 48 bn Euros in 2013. >> CLICK
- This is how the world would witness the advent of a new market segment that would change forever the face of retail and luxury. It was embodying our society’s irresistible globalization and bringing unprecedented opportunities for growth. We were the first to identify and define this new, fast-growing market segment of travelling retail customers. At Global Blue we called them the globe shoppers, international tourists for whom shopping is a fundamental part of their travel experience. >> CLICK They represent, at the very least and if you only take into account major luxury shopping destinations such as Europe, Singapore, Seoul and Japan, but exclude Hong Kong, Dubai and the US, a market worth more than 48 bn Euros in 2013. >> CLICK
- This is how the world would witness the advent of a new market segment that would change forever the face of retail and luxury. It was embodying our society’s irresistible globalization and bringing unprecedented opportunities for growth. We were the first to identify and define this new, fast-growing market segment of travelling retail customers. At Global Blue we called them the globe shoppers, international tourists for whom shopping is a fundamental part of their travel experience. >> CLICK They represent, at the very least and if you only take into account major luxury shopping destinations such as Europe, Singapore, Seoul and Japan, but exclude Hong Kong, Dubai and the US, a market worth more than 48 bn Euros in 2013. >> CLICK
- Seeing the Chinese demand surge, brands initially started to open stores in China; but the reality is that their cash registers more often than not are in Europe and the United States. As Philip Guarino, an expert on emerging markets, recently told the New York Times, in today’s market brands are now dealing ‘with a demographic, not a geography’ anymore. Prominent luxury and retail industry players have understood this high-performance segment and start to reorganize and put up strategies. Luxury industry analysts also take the globe shopper market into account when evaluating the performance of luxury brands and their development potential. And when announcing the creation of a new travel retail division to the press last December, the CEO of L’Oréal Group said that travel retail is a key channel for winning over one billion new consumers. The point is that now, brands have to read and manage their P&Ls by nationality of customer, not only by sales markets.
- These graphs show that the word’ globe shopper’ is not only a synonymous for Chinese tourist, and brands would be well-inspired to consider the globe shopper market in its totality, or at least make educated picks of the nationalities they want to target.
- Angela Ahrendts, the former CEO of Burberry, encouraged investors to switch their focus from China to the “TLC”. Shorthand for the “travelling luxury consumer”, she argued that this was a more powerful force than the Chinese market alone. Speaking of Burberry’s 25 “flagship markets” including London, New York, Dubai and Hong Kong, she said: “At any one time, 25% of transactions in those stores could be coming from Russian, Chinese or Middle Eastern consumers. It all depends what cultural holiday is taking place – Diwali, Ramadan, Chinese New Year or Christmas – as that’s when they travel.” Mrs Ahrendts was very clear-sighted, because today what we see in our transactions is that globe shoppers more often than not outspend domestic customers by 7 to 1 in average on the high street. As we said, brands are now dealing with a demographic, not a geography. It is high time for brands to look at their business in terms of nationality of consumers and not sales markets.
- However, after a few years of phenomenal growth from Chinese tourists recorded a bit everywhere in the luxury world, the market seems to be coming to maturity and the growth slowing down to more reasonable levels. If we look at the year-on-year growth pace if the Chinese globe shoppers total spend, we see a downward trend that started at the beginning of 2012. Of course there has been the new tourism law most recently, , which mainly had an effect on group tourism to Asian destinations, and of course the recent anticorruption mood in China had an impact on official travel and spending abroad that almost disappeared, but this trend actually started well before.
- However, after a few years of phenomenal growth from Chinese tourists recorded a bit everywhere in the luxury world, the market seems to be coming to maturity and the growth slowing down to more reasonable levels. If we look at the year-on-year growth pace if the Chinese globe shoppers total spend, we see a downward trend that started at the beginning of 2012. Of course there has been the new tourism law most recently, , which mainly had an effect on group tourism to Asian destinations, and of course the recent anticorruption mood in China had an impact on official travel and spending abroad that almost disappeared, but this trend actually started well before.
- However, after a few years of phenomenal growth from Chinese tourists recorded a bit everywhere in the luxury world, the market seems to be coming to maturity and the growth slowing down to more reasonable levels. If we look at the year-on-year growth pace if the Chinese globe shoppers total spend, we see a downward trend that started at the beginning of 2012. Of course there has been the new tourism law most recently, , which mainly had an effect on group tourism to Asian destinations, and of course the recent anticorruption mood in China had an impact on official travel and spending abroad that almost disappeared, but this trend actually started well before.
- Meanwhile, the Russian spending abroad has been more stable, although slowing down in growth along with the economy for a bit more than a year now. It only started to decelerate significantly in the past few months, just before the Crimean crisis.
- Meanwhile, the Russian spending abroad has been more stable, although slowing down in growth along with the economy for a bit more than a year now. It only started to decelerate significantly in the past few months, just before the Crimean crisis.
- Meanwhile, the Russian spending abroad has been more stable, although slowing down in growth along with the economy for a bit more than a year now. It only started to decelerate significantly in the past few months, just before the Crimean crisis.
- Nothing to do with the travel trends
- Some of you may be familiar with this not-so-old forecast by the world tourism organization, saying that by 2020 outbound tourism from China would reach 100 million travelers. Well, we have almost reached this number in 2013, and it will certainly be reached before 2015. So as we’ve seen on my previous slide now you can safely double this forecast, and bank on 200 million outbound travelers from China in six years from now.
- New tourism law, impact on groups and travel cost (Europe, 30%, Asia. 200-300%) This means less money for shopping Currency fluctuations > also and especially valid for all emerging countries Ban on Chinese official travel, represent 20 to 40% of all spending depending on destinations Shift to the USA / Australia, with different consumption patterns and travel purpose Shopping at home, Chinese consumption of luxury goods up 14% in December 2013 for exampl
- What are the possible conclusions of the previous slide: If we believe GDP is a good indicator for travel growth this should be around 5%. In general terms the economic outlook is improving, but there are downside risks. Traveller currencies should strengthen on the EUR giving us a positive push. In summary probably not a lot of change.
- “Some brands have 150 store locations in China alone, but their cash registers are in Europe and the United States.”
- “Some brands have 150 store locations in China alone, but their cash registers are in Europe and the United States.”