Asia Pacific Redefined by globalblue1

ASIA PACIFIC REDEFINED Addressing the regionâ&#x20AC;&#x2122;s changing tourism trends

OCTOBER 2017

GLOBAL BLUE CORPORATE COMMUNICATIONS

Jacques Stern

Chief Executive Officer

GROUP COMMUNICATIONS & EDITORIAL Domitille Pinta

Head of Group Communication

Duncan Skehens

AVP Digital Communications and Press Relations

Alison Cerles

Editorial and External Communication Officer

Pauline Morizot

Corporate Communications Coordinator

Gwyneth Holland

Contributing Editor

DATA Mathieu Grac

VP Intelligence Strategy

Muhammad Firdaus Bin Masdar Senior Data Scientist, Campaigns

STUDIO & PUBLISHING James Morris

Publisher

Fabio Gervasoni

Art Director

Yuese Shi

Senior Designer

Global Blue SA Route de Crassier 7, CH-162 Eysins, Switzerland Corporate Registration number: 5565726923 info@globalblue.com

CONTENTS

Interview with Greg Gelhaus, Head of Asia Pacific

Regional overview

APAC TOURISM TRENDS

The future of Chinese travel

DESTINATIONS

07 18 27

Singapore: the cosmopolitan jewel Korea: on the mend?

SHOPPING NATIONALITIES

Cautious Japanese

29 34

Confident Vietnamese Thai rebound

GLOBAL BLUE EXPERTISE

Tax Free Shopping

Digital Asia

Japan: the eastern surge

31 35

Koreans: riding the wave

Asian style goes global

14 26

Australia on the rise Malaysia, truly Asia

Promising Indonesians

India: the next growth engine?

Dynamic Currency Conversion

Marketing Services Intelligence

INTERVIEW WITH GREG GELHAUS Asia Pacific is acting as a global growth engine for the Tax Free Shopping (TFS) industry, with 2017 delivering impressive results across several key regional markets. Against the setting of this remarkable performance, Greg Gelhaus, Head of Asia Pacific at Global Blue, shares his views on Asia Pacificâ&#x20AC;&#x2122;s Globe Shopper sector.

Greg Gelhaus Head of Asia-Pacific

What factors have influenced the Asian

throughout 2016. Despite an increase in

industry continues to thrive, but also from

Globe Shopping industry in 2017?

TFS transactions throughout the year,

average spend per transaction.

lower average spend per transaction

International retail, or Globe Shopping,

severely limited TFS sales growth across

As a result, retailers who remained focused

is strongly linked to travel patterns and

the region.

on Globe Shopping and adapted business activities accordingly, have seen the

Asia Pacific has benefitted from a number of conditions that have fuelled the travel

Fast forward 12 months and the outlook

benefits offered by this unique group of

industry over the past 12 months. Solid

for the region could not be more different.

consumers and have emerged strongly

economic growth in China, along with a

Year-on-year TFS sales growth hit

from this slowdown.

growing middle-class and rising disposable

+39% in September 2017, a dramatic

incomes, have led to an increase in

improvement over the same period during

Throughout this report, we will explore in

outbound tourism.

2016, which saw growth flat at 0% (see

detail the factors that have contributed

graph below). This performance is driven

to this turnaround in performance, from

In addition, the expansion of air travel

by healthy growth not only in the number

macro trends in origin markets, to new

across the region has continued unabated,

of transactions, as the Asian tourism

innovations in our Tax Free destinations.

particularly from low cost carriers, which has further increased the diversification of destinations and the empowerment of secondary and tertiary cities in countries like South Korea and Japan.

Sales-in-Store (EUR) 29% 10%

How has the TFS sector performed during

-2%

15%

10% 8%

18%

33% 39%

11%

13%

that period? 12 months ago, the industry was still suffering from a slowdown in overall TFS sales which contributed to challenging 2

trading conditions for many retailers

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

next few years. These origin markets will

the last 24 months. Frequent travellers

region this year?

be explored in greater detail throughout

have made more than three trips in the

the report.

past 24 months and while they represent

Chinese visitors are clearly influencing

just 8% of total travellers, they contribute

every market within Asia Pacific and this

to 29% of TFS sales within Asia Pacific.

will continue in the coming years. They

How can merchants better engage with

Most interesting though is the Elite group,

account for over a third of Global Blue’s

Globe Shoppers?

made up of travellers who spent above

TFS transactions around the world and

EUR40,000 over the last 24 months (see

remain the biggest Tax Free spenders

Smarter use of data is one of the keys

graph below). Representing just 0.3% of

in Asia Pacific in 2017. The renewed

to helping our partners better engage

total travellers, Elites accounted for over

confidence of this group has driven up

with Globe Shoppers, allowing them

23% of TFS sales within the region and

Chinese TFS spend accordingly, with

to understand and target the most

made six trips on average in the last 24

year-on-year TFS sales across the region

valuable visitors to Asia Pacific. Our

months.

increasing by +50% over the last quarter

segmentation work around Globe

on 2016 figures.

Shopper groups is a great example of

Through this kind of analysis, we are

how our data can add value.

learning more about how these individuals

However, we are also seeing a number of

INTERVIEW WITH GREG GELHAUS

Which nationalities have influenced the

shop and their spending habits, and more

emerging Globe Shopper countries such as

Global Blue has identified three key groups

importantly, we are helping our partners

Indonesia, Thailand and India, that will grow

of travellers; Infrequent, Frequent, and

to focus their resources on the right

in importance across the region over the

Elite, based on transactional data from

customers, at the right time.

Segment size vs spend (%)

Frequent Traveller

Elite Traveller

1% 23%

of Globe Shopper of spending (in EUR)

8% 29%

What do you see as the prospects for the

of Globe Shopper of spending (in EUR)

Infrequent Traveller

91% 48%

of Globe Shopper of spending (in EUR)

further expanding our industry’s footprint.

coming years? -

Secondly, there will be significant

Firstly, the growth of the TFS sector in

opportunities to accelerate growth

Asia Pacific. The region accounts for

within our current markets of operation

approximately a quarter of Global Blue’s

through technology. Global Blue has

transactions worldwide, and as regional

recently launched innovations such as

tourism growth continues to outstrip that

Mobile Customer Care and Fast Refund,

of Europe, Asia Pacific’s share of global

that are improving the customer journey

TFS activity will continue to grow. We

and increasing refund ratios. With a

should also consider that there are still

healthy pipeline of innovations designed

many countries within Asia Pacific that do

to improve the TFS experience for both

not currently operate refund schemes and

merchants and Globe Shoppers, Global

we expect to see several of these launching

Blue will continue to drive value and

Tax Free Shopping over the next few years,

innovation for its partners. 3

REGIONAL OVERVIEW ASIA PACIFIC

SINGAPORE Singapore is the APAC destination welcoming the most local repeat travellers, with this group representing 75% of total inbound visitors.

MALAYSIA 24 months after the start of Global Blueâ&#x20AC;&#x2122;s operations in the country, Malaysia is now within our top 10 destinations in terms of Tax Free Shopping transactions.

REGIONAL OVERVIEW

SOUTH KOREA South Korea saw record breaking revenue from Tax Free Shopping in 2016, amounting to USD10.6 billion. JAPAN The island nation saw record +22% growth in foreign visitor numbers in 2016, reaching 24 million travellers, who spent USD33 billion.

AUSTRALIA In 2017, Asian travellers will represent 48% of total inbound visits to the country, fuelled by increased air routes from Chinese second and third tier cities.

TRENDS This first section examines the strongest trends affecting Asia Pacific’s tourism landscape in 2017. We initially focus on the profile of Chinese Globe Shoppers, their spending habits and the types of experience they are looking for when travelling within their native region. Later, we will look at the role of digital for Asia’s tourism industry, from facilitating bookings to new payment options. Finally, we will dive a little deeper into Asian fashion. There is no denying Asians’ refined taste when shopping for clothes, and with local designers and countries such as Korea gaining momentum within the global fashion sphere, Tokyo, Seoul or Singapore could very well rival Europe’s fashion capitals in the not too distant future.

TRENDS

THE FUTURE OF CHINESE TRAVEL

The retail, luxury and travel industries have

travel experience. Fuelled by a desire for

historical attractions. 100,000 Chinese

grown to rely on Chinese Globe Shoppers.

experience and exploration, the outbound

tourists visited Edinburgh Castle in

No wonder, when Chinese tourists spent

travel market continues to grow, with

2014, while the Los Angeles Tourism and

USD261 billion on foreign trips in 2016,

Chinese tourists projected to make 200

Convention Board reports that 42%

up +12% on 2015, according to the United

million outbound trips in 2020, a +48%

of Chinese travellers visit key cultural

Nations World Tourism Organisation.

increase from 135 million in 2015, according

institutions such as The Getty Center

But this vital travel market is evolving

to a report by Credit Lyonnais Securities

and the Los Angeles County Museum of

fast. Increased travel from Tier 2 and

Asia (CLSA). Established destinations like

Art (LACMA). Amrita Banta, Managing

3 cities, more sophisticated consumer

France, the US and UK are seeing Chinese

Director at Agility Research and Strategy

expectations, and the growing power of

visitors staying longer, and spending more

said, “Travel experts agree that this new

the millennial consumer are creating a new

on accommodation and dining as a result.

generation of Chinese traveller is more

future for Chinese Globe Shopping.

adventurous and wants to experience a International travel is becoming a

new culture. The younger ones go out and

Game-changers

necessity for many Chinese consumers.

are a lot more experimental. They do not

According to a Mintel survey of consumer

have the inhibitions of their parents.”

The shift in travel spending is driven by two

expectations in Tier 1, 2 and 3 cities,

key groups, both relatively new to Globe

“Travelling to new places” is a key personal

Shopping. The first, Millennials, are just

goal, rising to fourth place in 2017, from

Adventurous spirit

coming of age in terms of international

ninth in 2014. And it’s becoming more

travel, while the second, lower-tier

important to consumers’ perception of

More adventurous attitudes, especially

consumers, are just gaining access to non-

their success and wellbeing, with a quarter

among more experienced, independent

stop flights and affordable travel bookings.

of Chinese consumers saying that spending

travellers, mean that Chinese travellers

on holidays makes them feel that their

are beginning to look beyond the usual

quality of life has improved.

destinations in Asia and Europe to visit

With a wider selection of global brands available in key Chinese cities, and a growth

places that have unique cultural appeal.

in the Chinese luxury market, the reasons

To achieve that sense of fulfilment,

Thanks to easier visa rules, exotic new

for these consumers to travel abroad are

Chinese travellers are looking for a multi-

destinations such as Morocco, Peru and

changing. They’re looking for new shopping

faceted experience from their travels. To

even the Polynesian island of Tonga are

experiences, as well as unique experiences,

get the best possible trip, Globe Shoppers

opening up to Chinese travellers, who are

great accommodation, the best local

are now budgeting for shopping alongside

keen to explore the culture and lifestyle

cuisine and cultural immersion.

cultural or indulgent experiences. Overall

of these nations. But, as Avery Booker, a

spending increased +3.5% over the last

former partner at China Luxury Advisors

year. Cultural spending while travelling

says, “for every Chinese tourist who is very

Demanding more

is led by the growing number of Chinese

seasoned and is now going to the most

millennials travelling the world. According

obscure destination and buying the most

As more Chinese consumers take to the

to a TripAdvisor survey, 47% of millennials

obscure brands, there are still five-to-ten

skies, they’re demanding more from their

are interested in natural, cultural and

first-time travellers who are excited to be

[in Paris] on the Champs-Élysées taking

28%, backpacking trips growing from 10%

eschewing hotel brands in favour of more

selfies with their friends”.

to 26% and those looking for private luxury

authentic, local hospitality, such as renting

tours increasing from 8% to 23%.

apartments or staying in hostels, with 29%

The adventurous attitudes extend to

of post-90s travellers using these in the

accommodation too, and even those

Meanwhile, travellers are increasingly

last year. As many as 78% of post-80s and

who book tours are broadening their

willing to deviate from global hotel

72% of post-90s travellers intend to rent

horizons. According to the recent Chinese

megabrands, in favour of boutique or

accommodation rather than book hotels

International Travel Monitor by Hotels.

local hospitality. For affluent travellers

for trips within the next year.

com, the proportion of Chinese travellers

in particular, “boutique” luxury hotel

choosing specialised tours will increase

chains like Aman and Banyan Tree are

from 15% to 33% in the next year, with

becoming more popular, according to

interest in eco-tours rising from 13% to

the Hurun Report. Younger travellers are

FOCUS: Tier 2 & 3 Cities

While much of China’s current expansion

consumers will add USD1.8 trillion in new

in travel has come from affluent and

consumption to the economy, with 54% of

cosmopolitan residents from China’s Tier

growth coming from Tier 1 and 2 cities, and

1 cities, the increasing sophistication and

46% coming from lower-tier cities. The

economic power of those in lower-tier

growing power of consumers from lower-

cities will take Chinese Globe Shopping to

tier cities comes from their increasing

the next level.

spending power, and growing consumer confidence.

Climbing the ladder

A recent report by Morgan Stanley

claims that the lower-tier cities are likely

A report by Boston Consulting Group and

to be driving China’s economy by 2030.

AliResearch projects that by 2021, Chinese

These cities already make up 59% of the

2030, Tier 2 and 3 cities such as Wenzhou,

such as London, Paris, Moscow, Sydney

but have long been overlooked due to their

Nanjing, Foshan, Changsha, Qingdao and

and Las Vegas. Travel giant Ctrip is also

lower spending power. “While investors

Ningbo are expected to be home to over

targeting lower-tier cities, with a greater

perceive larger cities as offering the most

two million high-income consumers –

focus on serving their travellers through its

important consumer base, we believe that

those with over RMB200,000 (almost

Qunar platform.

lower-tier cities will be bigger, wealthier

USD30,000) in disposable income.

and more eager to spend, and could

Travellers from Tiers 2 and 3 travel about

contribute two-thirds of incremental

as regularly as those in Tier 1 cities – 1.9

growth in national private consumption

Next jetsetters

times a year, on average – but many trips

toward 2030”, said Robin Xing, Morgan

are likely to be regional rather than inter-

Stanley’s Chief China Economist.

As spending power increases in Tier 2

continental. Destinations such as Thailand,

and 3 cities, travel is becoming a more

Japan and Macau are popular, with 60%

Incomes in lower-tier areas are rising

popular way to spend time – and money.

of Macau’s 20-million visitors hailing from

faster than in the headline Tier 1 cities,

Research by Tianxun and UnionPay Smart

China’s lower-tier cities, according to

while lower costs of living mean that the

found that lower-tier cities are the biggest

Morgan Stanley.

disposable income of those in Tier 2 and 3

growth areas for independent travel, with

cities is increasing more rapidly. In 2007,

increases in departures from Hangzhou

per capital disposable income in China’s

(up +37%) Chongqing (up +45%) and

Future Globe Shoppers?

smaller cities was 55% lower than those in

Kunming (up +69%), while departures from

Tier 1, but the gap has now closed to 45%

Shanghai and Beijing have fallen -25%

Lower-tier consumers could be the future

today, and is expected to reduce further to

and -20% respectively. Access to global

of Globe Shopping, as tastes among Tier

36% by 2030. Led by growing numbers of

travel is getting easier, thanks to regional

1 travellers and millennials veer towards

middle-class consumers in lower-tier cities,

companies such as Hainan and Tianjin

experience. Research by Fung Global

consumption is outpacing the top-tier

Airlines who are creating new non-stop

Retail Tech (FGRT) found that tourists

cities, growing by +8.7% annually in the

routes from second-tier cities, to what

from lower-tier cities tend to spend more

lower tiers, compared to +6.6% in Tier 1. By

they call “first-tier international cities”

per trip than their Tier 1 compatriots,

TRENDS

country’s GDP and 73% of its population,

Average per visitor Spending on Most Recent Trip by City Tier May 2017 (US$)

2,335

2,449 2,230

1,078

1,053

1,025

1,282

1,204

1,370

Total

Tier 1 Cities

Lower Tier Cities

Base: All respondents (N=841), Chinese tourists from tier 1 cities (N=371) and lower tier cities (N=424). # Other spending includes: food and beverage, sightseeing, entertainment and local transportation. Source: China Luxury Advisors / FGRT

with an average spend of USD2,449

lower for now, their aspirations are not.

are still elements of the Globe Shopping

on their most recent foreign trip, 10%

This group are currently more interested in

experience that aren’t available at home,

higher than travellers for top-tier cities.

purchasing products than the experiences

and brands that can offer competitive

They also spent more on shopping than

or services favoured by tier one shoppers.

pricing, a diverse product and brand

Tier 1 travellers - USD1,370 compared to

selection, and impeccable service will still

USD1,204. Deborah Weinswig, Managing

Young people, in particular, are enthusiastic

Director of FGRT said, “With the rising

shoppers. According to GroupM’s latest

affluence of citizens in the lower-tier

Shan Hai Jin report, post-95 consumers in

As Chinese travel tastes – in destinations,

cities and better air connectivity to

Tier 2 cities are happy to spend money on

activities, brands and accommodation

overseas cities, retailers and brands

non-necessities, and are keen on branded

– change rapidly, brands must focus on

should not overlook these travellers from

goods, both domestic and foreign.

this new wave of tourists to understand

the lower-tier cities.”

attract their spend.

where the travel market is going. Shifting preferences among post-90 and post-95

Shopping for fun

Globe Shopper outlook

travellers can indicate the next brands

and destinations to focus on, while the

Widespread social media usage across

While experiential spending may be rising,

preferences of growing ranks of lower-tier

China means consumers in lower-tier cities

this doesn’t mean Chinese consumers

travellers will shape the new mainstream

are accessing the same information as

are no longer shopping when abroad - it’s

of Chinese travellers.

more affluent consumers in top-tier cities.

become part of a mix of travel activities

So, while their spending power may be

rather than the primary purpose. There

TRENDS

DIGITAL ASIA Asian consumers are leading the way in digital living, turning their smartphones into an international travel companion. The travel and retail industries are responding to these Globe Shoppers’ changing demands with innovative solutions and agile tools.

Connected consumers

Connected spenders are prevalent

Nielsen, Asia-Pacific has the highest rates

throughout Asia, thanks to the smart

of mobile purchasing, with 50% of online

Due to the nature of technological

solutions offered by regional apps such

consumers in China, 49% in India, 47% in

development in the APAC region, many

as Japan’s LINE (50 million users) and

South Korea and 46% of those in Vietnam

Asian consumers were first connected to

China’s WeChat social media services (900

reporting that they purchased a product or

the internet via their smartphones, and

million users) and Alibaba’s ecommerce

service via their mobile device in the past

their pocket-sized devices are now relied

platform (500 million users). Research by

six months. These nationalities also lead

upon for everything from communications

Nielsen suggests that the world’s mobile

the way with mobile app purchases - 50%

and entertainment to banking, gifting,

“connected spenders” will account for half

of people in China, 48% in South Korea,

shopping and research. Bain & Company

of global consumption, or USD260 trillion,

47% in India and 43% in Vietnam - have

estimates that 300 million consumers in

by 2025.

made purchases using an app. As Jeff

key Southeast Asian nations (Singapore,

Price, Managing Director of Southeast

Malaysia, Thailand, Indonesia, Philippines,

Asia at Experian, comments, “Asia is in the

and Vietnam) have a smartphone, while 48

Living digital

midst of a great digital revolution, with an

times as many people are connected to

explosion of smart devices, social media

the internet via mobile, compared to fixed

When Asian consumers are so confident

interactions and e-commerce transactions.

broadband. Meanwhile, 20% of China’s

and connected to their mobile devices,

The beneficiary of this interconnectivity

online population relies solely on mobile,

it’s no wonder they lead the world in using

is clearly the digital consumer, but also

compared with only 5% in the US.

smartphones for shopping. According to

businesses serving them”. On Taobao,

Alibaba’s e-commerce marketplace, the

and Malaysian consumers next. The use

survey is that Chinese customers tend to

proportion of sales via mobile devices

of digital wallets among young Malaysian

close the sale more quickly when they know

rose from 51% in 2014 to 62% in 2015,

consumers has increased from 15% to

that they can pay with mobile,” said Candice

reaching 68% on Singles Day 2015. Boston

20% between the first and second halves

Koo, the Managing Director of CANCAN.

Consulting Group forecasts that mobile

of 2016. New payment methods are a hot

will account for 74% of all digital sales in

topic across Asia Pacific, with the subject

The increasing prevalence of new services

China by 2020.

topping 83% of social media conversations

are making spending overseas easier

in APAC nations, according to Mastercard

for Frequent Globe Shoppers. Defined

research. “Technology is making the

as Tax Free Shoppers that made more

Shop as you go

promise and the potential of a less-cash

than three trips in the last 24 months,

life a reality for more people every day,”

this group accounts for almost one third

One of the key areas of development in

said Marcy Cohen, vice president of digital

(30%) of Tax Free transactions, despite

Asia is the growth of digital payments,

communications at Mastercard.

only representing 8.4% of total Globe

which far exceeds usage of the

Shoppers. Making an average of 4.14 trips

technology in other parts of the world. Going global

group’s payment needs are catered to will

competitive market for mobile payments,

be an increasingly important focus for

with leaders WeChat Pay and AliPay

While digital wallets rule at home, many

retailers going forward.

accounting for over 90% of China’s

Asian consumers are unable to use their

mobile wallet market, worth a reported

preferred services when travelling abroad.

For these Frequent Globe Shoppers,

USD5.5 trillion a year. WeChat’s digital

According to research by Kapronasia and

keeping track of their refund status is

payment service (600 million users) has

CANCAN, 67% of Chinese consumers have

crucial. Earlier this year, Global Blue

evolved from its wide-ranging social media

used mobile payments for some overseas

launched Mobile Customer Care (MCC),

platform, which is used for everything from

transactions, but only for 3% to 30% of

a digital application guiding Globe

messaging to news, entertainment and

their transactions. 21% said they haven’t

Shoppers throughout their Tax Free

online shopping – and now functions as a

used WeChat Pay or AliPay abroad because

Shopping journey. Transaction-triggered

mobile wallet. AliPay (500 million users)

they didn’t know they could. Few key

notifications are sent to their smartphone

is part of Alibaba’s e-commerce platform,

shopping destinations offer the service,

containing a link to the website where

making it easier for users to buy from its

with Harrods, Selfridges (London) and

they can track the status of their refund

online services, and now in-store, using QR

Galeries Lafayette (Paris) only adding the

and be informed about the next required

codes. According to research from the UN,

service last year, but research suggests it

action. Other value-added tools include

the two companies are estimated to have

can help encourage consumers to make a

refund reminders options and local

processed almost USD3 trillion in 2016,

purchase. “What we have found from the

airport guides.

with Alipay leading at USD1.7 trillion, ahead of WeChat Pay’s USD1.2 trillion. These third-party platforms are fast replacing cash and credit cards in China, according to analysts. “Consumers in China have greater confidence in the security of third-party payments compared to their counterparts in the West”, says Jessie Qian, Head of Consumer Markets, KPMG China. “Furthermore, credit cards have not been readily available for some Chinese consumers, so third-party mechanisms are becoming an alternative way of making payments in a convenient and secure environment”. China clearly leads the way in mobile payments, the technology is becoming more widespread across the region, with 12

over the last two years, ensuring that this

China, in particular, has an advanced and

plans to roll out the facility to Japanese

TRENDS

Tech travel

on their destination, before buying

Smart services will be key, like Troika, the

flights and accommodation via Meituan,

friendly customer service robot recently

But there’s more to Asian consumers’

Sougou or Ctrip. At their destination, they

introduced at Seoul’s Incheon International

digital demands than just payment.

might go back to WeChat for shopping

Airport. Cashier-less stores like BingoBox

Digital-savvy Millennials dominate Asia’s

or sightseeing ideas, and to share their

could meet the convenience needs of the

travel population, accounting for 35% of

experience via WeChat moments.

digital consumer: customers can enter the store and pay for goods using their WeChat

the USD600 billion that Asians spend on international travel every year. Millennials

For Asian travellers, digital services are

accounts. Not to be outdone, Alipay is

alone are expected to spend USD340

just as vital at destination as at home,

testing a cashier-less café, accessed using

billionn on international travel by 2020,

especially for independent travellers -

an Alibaba Taobao account.

and they expect to use digital services

spurring innovation in the hotel industry.

throughout their trips.

Marriott Hotels have created a WeChat

APAC customers are also enthusiastic

concierge service, as well as a mobile

about future technologies that boost

Many Asian consumers use digital services

loyalty app and Alipay options. “As Chinese

security. A Mastercard survey found

to research and book their travel, as well

travellers continue to take their travel

that 45% of consumers in the region are

as to inspire their shopping excursions

aspirations further, we need to grow with

interested in biometric authentication

and arrange special trips and events.

them and understand what they want, and

to offer advanced security, and as

According to eMarketer, digital travel

how we can meet their needs,” said Peggy

an alternative to passwords and PIN

sales in China - from hotels to flights to

Fang Roe, chief sales and marketing officer,

numbers. South Korean retail giant Lotte

activities – are predicted to grow 28% to

Asia-Pacific for Marriott International.

is already testing the idea with Hand Pay, which scans shoppers’ palms to

hit USD113 billion in 2017. China Internet

authenticate purchases.

Network Information Center reports that 53% of Chinese tourists used mobile apps

Digital futures

to book their trips online, while young and

While some of these innovations may

affluent consumers look to WeChat for

For the tech-savvy Asian consumer, digital

seem futuristic, digital development is

inspiration and information when planning

products and services are essential for the

moving at a rapid pace in the region, and

the activities and shopping for their

future. New technologies suggest exciting

digital consumers are demanding smart,

trips. But they’re not necessarily loyal to

possibilities for Globe Shoppers in Asia,

seamless services wherever they go.

one platform – they may get inspired on

and beyond. Many Chinese consumers

Brands that fail to offer innovative and

WeChat, but go to sites like Mafengwo,

already expect a cashless society in the

useful solutions could be left behind by

Qunar or Qiongyou for deeper research

next 10 years, so, where can tech go next?

Asia’s connected consumers. 13

ASIAN STYLE GOES GLOBAL As inter-regional travel increases, APAC consumers are discovering world-class fashion in their own cities, and nearby destinations. Aided by star names and an increasingly global outlook in the fashion industry, Asian brands are making waves at home, and across the world.

New hubs

shops, independent brands and food

boosted by the arrival of Dover Street

trucks, while Rare Market, owned by the

Market, “Comme des Garçons’” artistic

Fashion in the Asia-Pacific region has long

sister of K-pop star G-Dragon, offers a

multi-brand store concept.

been dominated by Western retailers and

mix of international brands and sought-

multinational brands, but APAC consumers

after local streetwear brands. Concept

Meanwhile, in Hong Kong, local and

are increasingly turning to local brands,

stores like Space Mue, Boon the Shop

international retailers are hoping to bring

offering new opportunities to local

and the Korean outpost of 10 Corso Como

new life to the city’s fashion scene with new

designers and retailers, while rejuvenating

offer something different for well-heeled

store concepts. Renowned luxury retailer

shopping culture in China, Korea, Japan,

shoppers, but the young and the hip head

Joyce recently refreshed its flagship store

Singapore and Hong Kong.

to the distinctive flagship stores of cult

with a redesign by architect Paola Navone

brands like Gentle Monster, Stylenanda

and an immersive fashion exhibition

and Boy+ by Supermarket.

including a fibre optic dress by Korean

In South Korea, the districts of Cheongdam and Gangnam are developing

artist Kim Tae Gon.

an international reputation for their

To keep up with changing tastes, Asia’s

combination of local and international

longstanding shopping hubs of Singapore

brands, glittering brand palaces,

and Hong Kong are rejuvenating their

K-power

expansive malls and fascinating concept

offerings to attract savvy regional

stores. Common Ground, the world’s

consumers. Despite being known for its

Asian consumers are also looking to

largest cargo-container shopping mall

vast malls, Singapore has long had a culture

local brands to cater to their lifestyles

boasts hipster essentials like pop-up

of independent and innovative retail, now

and to their body shapes better than

“The whole Korean culture effect, from

finds that 56% of APAC consumers

travel, entertainment and food to fashion

believe that local brands are the most

and beauty, has made most things ‘from

attuned to their personal needs and

Korea’ popular,” says Deborah Cheng, vice

tastes. “The market conditions are better

president of marketing at Hong Kong

than ever for local brands, as they are

multi-brand fashion retailer I.T., which

well placed to meet changing consumer

stocks Korean brands such as Stylenanda,

needs versus the big brands than previous

Steve J & Yoni P and Juun J.

TRENDS

international brands. Research by Nielsen

decades”, says Jean Lim, spokesperson for Nielsen Korea. Show time This shift is being fuelled by Hallyu (the

Korean Wave), a huge public interest

To increase their international and

in all things Korean, largely due to the

regional profile, Asian fashion brands are

huge success of its TV dramas, pop stars

embracing the growing number of fashion

and even beauty brands in many Asian

weeks across APAC, while government

countries. Hallyu has made Korea the

organisations are using these headline-

biggest cultural force in the region. For

grabbing events to stimulate their national

Asian consumers, the Korean Wave is

garment industries and showcase their

now competing with Western style, as it

skills to the world.

connects with Asian emotion and cultural values around family, community and

Many of the burgeoning Fashion Weeks,

etiquette. The knock-on effect of Hallyu

offer opportunities to local designers, as

is driving interest in local Asian brands

well as offering new audiences to brands

and products across the region, which

from across the region. Fashion Week

is playing a pivotal role in the growth of

Tokyo spotlights the best new Japanese

Asian markets. The power of Hallyu has

talent, such as Bed j.w. Ford, Akiko Aoki

boosted tourism to Korea, particularly

and Yohei Ohno as well as designers

from China and Japan, and turned Korean

from around Asia, including Nguyen Cong

celebrities and brands into household

Tri from Vietnam and Moto Guo from

names across the globe.

Malaysia.

“Before, many Asians thought luxury goods had to come from the West, but they are becoming more sophisticated and discerning and now more people are interested in local designers who have their own point of view and unique style” - Lee Seo-hyun, president of Samsung C&T’s fashion division

fashion credentials, many designers are keen to compete with the big brands on an international level. Hong-Kong based brand Jourden is already stocked at leading luxury boutiques and department stores in the US, Europe and Asia, while Chineseborn designer Yiqing Yin has won several European fashion awards and been praised by the international fashion press for her singular talent. Along with her compatriots Guo Pei and Laurence Xu, Yin is part of a new wave of Chinese-born couturiers who are taking high fashion by storm. As well as successful couture collections, Guo Pei has gained support from international style icon Rihanna, while Xu has dressed Fan Bingbing for the Cannes Film Festival. Hong Kong-based event Centrestage, now

have been seen as more desirable than

While key Chinese designers are gaining

in its second year, features local labels

local ones, not only for their quality but

headlines around the world, Korean brands

such as Harrison Wong, Loom Loop and

the cachet of their brand name. But rising

are gaining cult status in top fashion

Maison Vermilion, alongside Juun from

spending power across APAC, as well as

capitals. SJYP, created by Steve Jung and

Korea, and DressedUndressed and GV

the resurgence in regional pride, is creating

Yoni Pai, is sold by influential retailers

GV from Japan. Fashion weeks are also

a growing interest in local design.

like Selfridges in London and Opening

growing in India, Indonesia, Malaysia,

Ceremony in New York, while eyewear

the Philippines, Singapore, South Korea,

Leading APAC retailers are increasing

brand Gentle Monster has become a

Vietnam, Thailand and across the region

their range of local brands, furthering

streetstyle phenomenon. The brand sees

while in mainland China, there are several

the strength of Asian fashion at home.

queues around the block at its Shanghai

fashion weeks in different provinces.

Hong Kong’s Lane Crawford has long

store, and has quadrupled sales every

Fashion weeks in Guangzhou, Tianjin,

been a supporter of Chinese designers,

year since its launch in 2011. High-profile

Xiamen and Shenzhen compete with the

with brands like Ms Min and Comme

collaborations with unique stars such

high-profile Shanghai Fashion Week,

moi becoming its fastest-growing

as Tilda Swinton, and an adventurous

which aims to help the city become APAC’s

contemporary labels. “Before, many Asians

aesthetic, mean Gentle Monster now has a

fashion hub. To support this ambition,

thought luxury goods had to come from

global profile, with stores in Korea, China

Chinese brands are competing with the

the West, but they are becoming more

and New York soon to be followed by a

biggest global brands when it comes to

sophisticated and discerning and now more

London flagship.

fashion extravaganzas. Shenzhen-based

people are interested in local designers

brand Migaino spent over 10 million yuan

who have their own point of view and

As local and global consumers discover

(USD1.49 million) on a fashion show

unique style”, says Lee Seo-hyun, president

Asian brands, they’re shifting the balance

celebrating its 20th anniversary, featuring

of Samsung C&T’s fashion division.

in global fashion from primarily western

Chinese supermodels, and a specially

to truly global. Asian consumers are the

commissioned fashion film. The Chinese

This focus on local luxury could be key to

most influential when it comes to high-

fashion industry has reason to be so

attracting Elite Globe Shoppers, those

end fashion, making up around a half of

bullish, with Boston Consulting Group

spending over EUR 40,000 in the last 24

all shoppers, according to the Business

predicting that China’s fashion industry will

months, to new APAC retail destinations.

of Fashion, so when their attention turns

become the world’s second largest (after

According to Global Blue transaction data,

to local rather than global brands, their

the US) by 2020, with spending expected to

while this group accounts for just 0.33%

influence will affect the fortunes of Asian

hit RMB1.3 trillion.

of Tax Free sales within APAC, over the

and global brands alike.

last two years they represented 23% of total Tax Free spend, with each traveller Cultural crossover

averaging 6.3 trips during that period.

For many consumers in APAC, foreign

While a growing appetite for regional

brands, particularly European luxury labels,

designs and brands may boost APAC’s

APAC DESTINATIONS In this section, focused on Global Blueâ&#x20AC;&#x2122;s key Tax Free Shopping destinations in Asia, we explore micro-economic drivers in Singapore, Japan, Australia, Malaysia and Korea. These mature luxury shopping markets are a big draw for Chinese and other Asian Globe Shopping nationalities, who are increasingly choosing short-haul overseas trips within Asia Pacific for major holidays such as Golden Week or Chuseok festival, where experience, cuisine and culture are now on an equal par with shopping when choosing travel destinations. Add to the mix favourable currency FX, convenient locations via new airline routes and extra savings after shopping Tax Free and it is easy to understand why growing numbers of middle-class shoppers from across Asia are choosing to travel and shop local.

SINGAPORE: THE COSMOPOLITAN JEWEL

APAC’s travel hub

held onto its position as the APAC region’s

numbers to Singapore reached 13.11 million,

second most visited destination, reports

one million more than in 2015, placing the

According to the World Travel & Tourism

Mastercard’s Global Destinations Index

city behind Bangkok (19.41 million), but

Council (WTTC), the total contribution of

2017. Amidst fiercer regional tourism

ahead of Seoul (12.39 million). Singapore

the Travel & Tourism industry (T&T) to

competition, in April 2017 the Singapore

is the leader of intra-regional arrivals in

Singapore’s GDP amounted to SGD39.7

Tourism Board (STB), Singapore Airlines

APAC with almost eight million visitors.

billion (USD28.7 billion) in 2016. almost 10%

(SIA) and Changi Airport Group renewed

As per most APAC destinations, Chinese

of the national revenue. This contribution

their ongoing partnership to promote

travellers accounted for the largest share

is set to rise by +3% every year from

Singapore as a choice stopover as well

of arrivals (17.5%), the equivalent of 2.3

2017, growing to SGD58.6 billion (USD43

as a twinning destination. From now on,

million visitors, followed by Indonesians

billion) or 11% of Singapore’s GDP by 2027.

communication and marketing campaigns

(two million) and Indians (920,000).

Compared to many other high-income

will also be directed towards Asian

economies in Europe and North America,

travellers, and not only long-haul market

In terms of spending within the region,

Singapore’s T&T industry makes a greater

countries (the US and Europe).

Singapore boasts the highest overall

contribution to the country’s GDP. 18

During 2016, the city-state of Singapore

tourist expenditure at SGD21.5 billion in These investments have already paid-off.

2016 (USD15.4 billion), ahead of Bangkok

In 2016, international overnight visitor

(USD12.7 billion) and Tokyo (USD11.1 billion).

+8% growth in transaction numbers

compared to the same period a year

Over the past few years, the rise of

before and +5% increase of Tax Free sales.

e-commerce and pricey commercial

Chinese Globe Shoppers represented 37%

rents have put strain on Singapore’s

of this activity, followed by Indonesians

retail industry. In parallel, Tokyo, Seoul

(20%) and Malaysians (6%).

APAC DESTINATIONS

Changing retail landscape

and Kuala Lumpur’s growing notoriety as major international shopping hubs has

The Fashion category has now taken

attracted growing numbers of trendy

over the Watches & Jewellery category.

Globe Shoppers.

At 37% of total spend and 44% of total transactions, Fashion is now the

Volatile tourism numbers and changing

top category in Singapore, previously

demographics did not help either. Chinese

considered as the Watches & Jewellery

travellers from Tier 1 cities were reluctant

capital of APAC. The Perfume &

to shop abroad amidst slower economic

Cosmetics category grew faster than

growth and corruption crackdowns.

any other category with a +16% increase.

Indonesians, Thais and Malaysians

Projections for the next five months

discovered they have competitive

are positive and potential growth driver

versions of the same luxury products

nationalities are already emerging, with

back home. Yet, as of 2016, STB reports an

Malaysians first, posting a +31% sales-

all-time high record of tourism receipts,

in-store increase and Indians (+16%) also

13.9%, the equivalent of USD24.8 billion.

performing strongly.

This result is largely due to the high volume of Chinese travellers arriving from Tier 2 and Tier 3 cities while Indonesian

On harnessing future growth

and Indian visitors started to spend more

on shopping, accommodation, attractions,

During 2017, Mastercard expects +2.6%

and food and beverage.

growth in visitor arrivals to Singapore, a slower rate compared to other regional

In 2017, renewed consumer confidence and

destinations such as Kuala Lumpur (+7.2%)

improving traveller mix solidified 2016’s

and Tokyo (+12.2%) or international

positive trends. Between January and

destinations such as London (+5%) and

September 2017, Global Blue data showed

Dubai (+7.7%).

“It is clear that the traditional retail model is inadequate in today’s context. Physical stores are less of a point of sales, but a point of experience.” - Christine Li, director and head of research at real estate consultancy Cushman & Wakefield Singapore.

A Brandscapes Worldwide study claims

and enhance visitors’ experience. For the

by food and experience as they are

that Singapore attracts the most repeat

hospitality sector, the Earn-and-Learn

unlikely to be replaced by online options,”

travellers in the APAC region, at 75%,

Programme and the SkillsFuture Study

says Christine Li, director and head of

closely followed by Hong Kong (62%) and

Awards were launched to train future T&T

research at real estate consultancy

Kuala Lumpur (61%). Yet, the Singapore

industry salesforce.

Cushman & Wakefield Singapore.

a lack of understanding of what Singapore

For the retail industry, “experiential malls

A promising growth driver: Singapore’s

is as a nation, often misperceived as

are now a priority in what is already a

cruise ship scene, ranked Top Cruise

“boring and expensive”. By already having

very mature and sophisticated retail

Destination at the Seatrade Cruise Awards

a strong, mature retail offering and amidst

market” says Business of Fashion. In

and Top Asian Port of Call at the Cruisers’

fiercer regional competition, Singapore’s

2017, the new e-commerce SingPost

Choice Cruise Critic Awards in 2016. STB

challenge for the future will be to renew

mall will include the “O2 concept” where

data reports a +16% increase in cruise

and diversify its T&T offering.

offline and online shopping merge.

passengers in 2016 compared to the

“The mall of tomorrow will be anchored

previous year and 10 maiden calls.

Tourism Board (STB) reports that there is

The government is betting big on the T&T industry, and within APAC, the island-city boasts the highest investment share of GDP in tourism, easily offering the best T&T infrastructure in the region. Singapore already owns six out of the top 11 tourism attractions in Asia, with attractions such as Merlion Park, the island resort of Sentosa, Marina Bay Sands. Recent investment projects include aircraft purchases by Singapore Airlines, new runways at Seletar and Changi airports, and new resort developments. New partnerships with different stakeholders from the T&T industry will enable Singapore to develop attractively priced tourist packages and promote as-yet untouched areas Singapore’s unique cultural scene. Soon, SIA, STB and Changi Airport Group will upgrade the Free Singapore Tour offered to transit travellers to focus on more unique propositions, such as a heritage tours through the colonial and cultural districts of Chinatown, Little India and Kampong Glam. In parallel, a rejuvenated tourism offer will see new attractions and lifestyle venues blooming across the country, such as KidZania Singapore, a permanent digital art gallery Future World and the Michelin Guide Singapore. The government is also supporting the transformation of the T&T industry through the Business Improvement Fund and the Experience Step-Up Fund. In 2016, the STB supported 52 technology-related projects to improve industry stakeholders’ 20

productivity, acquire new businesses

APAC DESTINATIONS

KEEPING SINGAPORE COMPETITIVE

Jan Moller Country Managing Director - Singapore & APAC Sales

Which factors have influenced TFS

such as Bangkok and Kuala Lumpur. While

performance during 2017?

we still see a healthy pipeline of brands

investing in the city, including recent

After a challenging 2016, we see a

flagship store openings from Gucci, Apple

continued growth in arrivals into

and Uniqlo, there is recognition that we

Singapore, with a positive impact on

need to do more to ensure we remain

spend across all sectors. The January to

attractive to international visitors.

September period showed a +5% increase of TFS sales transactions in comparison

The good news is that the Singapore

with the previous year and our projection

Tourism Board, retail associations and

for the next five months is positive. More

malls are investing in new initiatives to

favourable travel patterns, particularly

revamp Singapore as a tourist destination.

from Chinese and Indonesian consumers,

With retail at their heart, these schemes

have been the main driver of this recent

focus on experience, strongly supporting

improved performance. The first week

new local designers, events and new digital

of October showed +25% growth of TFS

campaigns to differentiate Singapore and

transactions, largely driven by Chinese

attract shoppers.

Golden Week. As with most Asian markets, Chinese are the

How can partners better serve Globe

largest Globe Shopper group in Singapore

Shoppers?

and consumer confidence in China has

meant growth throughout the year. While

We work closely with our merchant

2016 performance was largely driven by

partners, but also with retail associations

travellers from Chinese Tier 2 and 3 cities,

and government departments, to help

the return of higher-spending visitors from

them to understand the behaviour of Globe

Chinese Tier 1 cities in 2017 has helped

Shoppers. Singapore is one of Global Blueâ&#x20AC;&#x2122;s

increase average spend after two years of

leading markets when it comes to data and

declining spend. Singapore also remains a

intelligence needs, and our insights are to

stronghold for visitors from neighbouring

help them understand when it comes to

markets like Indonesia and Malaysia.

allocating their marketing spend and win the loyalty of new customers.

How can Singapore retain its status as the

We are also continuing to digitalise and

regionâ&#x20AC;&#x2122;s shopping hub?

personalise the Globe Shopper journey,

with the upcoming launch of innovative new

Singapore remains the premier retail

services, such as Mobile Customer Care.

destination in South Asia, however recent

These services will ensure our partners are

years have seen increased competition

able to offer the very best TFS experience

from other destinations across the region,

to their customers. 21

JAPAN: THE EASTERN SURGE

Stakes are high for the Japanese Travel &

In terms of spending, international tourists

Tourism industry (T&T). Ahead of the Tokyo

posted a record high of JPY3.75 trillion

Olympic and Paralympic games of 2020,

(USD33 billion), a +7.8% increase compared

the government and industry stakeholders

to the previous year. For the same year, the

are accelerating their efforts to welcome

T&T industry’s contribution to Japan’s GDP

and ease international visitors’ stays in the

amounted to JPY37.3 billion (USD343.2

country. The target of 40 million visitors

billion), a 7.4% share. In 2017, the World

has been set for 2020 and 60 million for

Travel & Tourism Council predicts T&T’s

2030. A series of favourable events are

contribution to Japanese GDP will grow by

paving the way to meet these targets.

+2.5% and rise by +1.6% per year between

Recently, Japan came fourth in the World

2017 and 2027.

Economic Forum’s 2017 Travel & Tourism Competitiveness Index, advancing by five positions since 2015. The past few

Cultural melting pot

years have also seen Japan benefit from

external factors, helping it to attract more

Global real estate expert Savills’ study on

international visitors; the depreciation

the Japanese retail landscape recognised the

of the Japanese yen, China’s economic

rapid change of inbound tourists’ spending

growth, airport deregulation and relaxed

habits and confirms “a new phase”.

visa policies with certain local countries. Far away from buzzing Tokyo and Osaka, Japan saw a record +22% growth of foreign

the more rural parts of Japan are welcoming

visitor numbers in 2016, reaching 24 million.

a growing number of tourists in search of

“The impressive uplift in Chinese visitors, driven largely by domestic consumer confidence, has seen the Japanese TFS sector flourish this year. The softening of the yen against the yuan has made Japan even more affordable, as has the introduction of new low-cost air routes to Western Japan; particularly with visitors from Tier 2 and 3 Chinese cities..” - Toshi Shimizu, Global Blue Japan

APAC DESTINATIONS

traditional Japan. Experiential tourism is on

Western parts of Japan. As a result, the

beginning of the year, tourist spend has

the rise, notes Taiken Japan, as authentic

number of seats has increased by +25%

been on the rise in Japan. In fact, travel-

and immersive tourism activities blossom

since the beginning of 2017. In September,

related spending hit a quarterly record

around the country. Travellers can now pick

Japan Airlines, the leading international

high between April and June, reaching

Shiitake mushrooms in Atami, witness the

airline in Japan, announced an order of four

JPY1.08 trillion. At JPY414.6 billion,

making of a samurai blade in Bizen Osafune

Boeing 787-8 Dreamliners. This is “a key

spending on shopping grew by +15% from

Token Village (next to Okayame), take part

part of our strategy as we look to bolster

the year before.

in making traditional fermented foods

our existing route network and strengthen

(miso, kimchi etc.) in Yamada and even rent

our position ahead of the 2020 Summer

Much like other regional countries,

Kimonos.

Olympic Games in Tokyo,” said Yoshiharu

Japan is witnessing a change in

Ueki, President of Japan Airlines.

inbound traveller demographics, with consequences for travel expenditure.

The government welcomes this trend and is encouraging the T&T industry to become

The government is also introducing new

Over the January to September 2017

less reliant on Japan’s biggest cities. In

retail areas in more rural towns to reach

period, the number of sales-in-store grew

order to diversify tourism spend across

a JPY8 trillion milestone of tourist spend

by a staggering +34% compared to the

the country, new airlines have been opened.

by 2020. A GS1 Japan Institute survey,

previous year. Chinese Globe Shoppers

Low cost carriers are scheduling flights

conducted on visitors to Japan, showed

accounted for 46% sales-in-store during

from China’s second and third tier cities,

that “shopping” is still one of the biggest

this period, followed by Koreans (31%)

Hong Kong and South Korea to Osaka and

reasons to visit the country. Since the

and Americans (12%).

Beauty contest

with their customers, thanks to Chinese

the government. There has been a

language leaflets and displays, and trial

growing number of multilingual websites

While the popularity of Korea’s K-beauty

cosmetic kits for passing Globe Shoppers.

and apps designed to help foreign

sector has increased around the globe,

visitors overcome language barriers

Japanese branded cosmetics still hold

and locate local tourism activities. For

on to their reputation as high-quality

Growth opportunity for leisure

example, free web magazine Matcha is

products. APAC tourists flock to Japan

available in 10 languages and informs

to purchase products designed for Asian

60% of overseas visitors to Japan are

visitors on food, festivals and events

skins, UV-blocking or skin-lightening

repeat travellers reports Savills. As

from Hokkaido to Okinawa.

creams in particular. Shinji Yamada,

much as 80% of Hong Kong inbound

spokesperson for cosmetic Japanese giant

travellers have been to Japan before.

Kanebo speaks of a better perception

Chinese famously flock to Japan to

of Japanese cosmetics compared to

enjoy the country’s Winter and Summer

Chinese-made ones. The Nikkei credits

sales during their “explosive buying”

the cosmetic sector for the rebound in Tax

spree, Bakugai. According to Japan

Free sales of goods in department stores

Tourism Agency, foreign tourists leisure

in 2017. Cosmetic drugstore sales are

expenditure amounted to JPY 34.3

growing rapidly as the number of drugstore

billion over the April-June period, a +24%

locations blossom around the country.

increase compared to the previous year,

In addition to Chinese-speaking beauty

but still a small 3% share of total travel-

consultants at their counters, international

related expenditure. There is room for

cosmetic brands are engaging better

further leisure spending growth predicts

APAC DESTINATIONS

UNDERSTANDING JAPANâ&#x20AC;&#x2122;S TFS BOOM

Toshi Shimizu Country Managing Director - Japan

Japan is enjoying a stellar period for TFS.

frequent shoppers and target them with

What is driving this performance?

bespoke offers and coupons, or even move

them onto loyalty programs for high value

The impressive uplift in Chinese visitors,

customers. This new service is the first

driven largely by domestic consumer

step towards increased personalisation,

confidence, has seen the Japanese TFS

which will be a key driver to maximise TFS

sector flourish this year. The softening

sales in Japan over the next few years.

of the yen against the yuan has made Japan even more affordable, as has the introduction of new low-cost air routes to

What new technologies will improve

Western Japan; particularly with visitors

efficiency for partners?

from Tier 2 and 3 Chinese cities.

We are currently piloting two new in-store

At the same time, TFS has become more

services in Japan that will dramatically

ubiquitous across the country, thanks in part

improve the way refunds are paid to

to the Japanese governmentsâ&#x20AC;&#x2122; plans to shift

Globe Shoppers. More importantly, these

tourism to local cities. At the end of 2016,

services will increase efficiency and reduce

there were over 35,000 TFS authorised

costs for our partners.

stores across Japan. In 2017 there are now over 40,000, with most of these new

First, the introduction of Non-cash

locations coming from smaller cities as the

refunds, will help to manage risk and TFS

government seeks to spread Globe Shopper

operational costs in stores across Japan.

spend across the country and create less

Currently being piloted with Hankyu

reliance on cities like Tokyo and Osaka.

Hanshin, we are planning to rollout Noncash refunds to all department stores by end of financial year.

How can Globe Blue help partners identify the most valuable Globe Shoppers?

Second, we are also piloting self-

service Refund Kiosks with Daimaru

We have recently launched a unique

Matsuzakaya. This technology is already

service to help merchants identify VIP

available in many other countries and is

Globe Shoppers based on our extensive

proven to reduce overhead costs and the

traveller database. With the swipe of a

reliance on manned counters for issuing

passport, store staff can now identify

Tax Free forms.

AUSTRALIA ON THE RISE The total contribution of the travel and tourism industry to Australia’s GDP in 2016 reached AUD183.2 billion (EUR181.2 billion), 10.9% of the country’s GDP, and is forecast to rise by +3.3% in 2017. From 2017 to 2027, the World Travel & Tourism Council expects +2.5% growth per year, amounting to AUD241.9 billion (EUR160.5 billion) in 2027. Today, how can Australia make the most of the region’s changing tourism landscape to reach these numbers?

The Chinese bet In 2016, Australia welcomed 8.6 million travellers. By the end of 2017, Government agency Tourism Research Australia (TRA) estimates the number of international visitors will reach 9.2 million. By 2019, Asian tourists will account for over half of these visitors. As of 2017, 48% of these travellers come from the APAC region with Chinese Globe Shoppers ranking as the first contributing nationality, and an expected 1.3 million tourists by the end of 2017, followed by Japanese Globe Shoppers at 427,000 arrivals. In terms of spending, China has already surpassed expectations from the Australian Tourism 2020 strategy report. That report valued Chinese spend between USD7.4 billion and USD9 billion a year by 2020. Yet already, Chinese spend is estimated to be USD7.7 billion annually and could reach USD13 billion by 2020. China’s growth shows no signs of stopping. The evolution of growth rates for both tourist arrivals to Australia and retail spend, surpass any other nationality. Since 2016, many stakeholders from Australia’s tourism industry have bolstered their offerings, “developing experiences which better meet the needs of the many Chinese visitors” according to John O’Sullivan, Managing Director at Tourism Australia. Hotel brands have been careful to adapt their offering to Chinese tourists including staff cultural training, Chinese dishes on menus, Chinese newspapers and

television channels, confirms Simon McGrath, Chief Operating Officer of AccorHotels Pacific, the nation’s largest hotel operator. Chinese travellers’ tastes are changing too. While major Australian cities still attract the majority of Chinese inbound traffic, coastal and regional locations are now on the map too, as Chinese tourists seek more individual and experiential adventures. Australia’s aviation industry is also evolving to welcome an increasing number of inbound tourists from the APAC region. The signature of the open skies pact with China at the end of 2016 liberalised the traffic between the two countries. Since then, a number of Chinese carriers have opened new air routes to serve Chinese second-tier cities such as Chongqing and Fuzhou. As a result, TRA forecasts that inbound aviation capacity from China will grow +11.8% between 2017-2018 and by +10% between 2018 and 2019.

A booming retail offering Australia’s retail landscape is changing. At the beginning of 2017, Deloitte reported that an additional four of the world’s top 250 retailers now operate in the country. These new arrivals were well-known high-street brands and retailers such as French sport specialist Décathlon, British department stores John Lewis and Debenhams, and American retailer The TJX Companies. Indeed, these foreign brands wish to “expand their business internationally into a stable market on a relatively small scale,” confirms David White from Deloitte.

openings in Perth and Queensland, as established brands looked beyond Sydney and Melbourne to extend their reach to a wider audience. Notable amongst these was the Gold Coast’s recently revamped, Pacific Fair shopping centre, home to many luxury retail stores. Brands and retailers can also rely on their relative proximity with Asian countries to boost their sales according to Euromonitor, with Chinese Globe Shoppers a main driver of that growth. A breakdown of GST value claim data, collected at Australia’s entry points, shows that the number one category remains the Fashion sector, with AUD249 million collected at the end of the 2016 financial year. The Watch and Jewellery industry comes second at AUD154 million followed by the luxury bags sector at AUD125.5 million. With over half a million claims recorded that same year, Chinese travellers represent nearly half of total VAT claims recorded (1.3 million), the equivalent of AUD 509 million. Although geographically closer, Globe Shoppers from New Zealand post a modest 51,000 claims. From the APAC region, besides Chinese, Malaysian and Taiwanese Globe Shoppers posted the highest numbers in terms of GST value, at AUD16 million and AUD13.3 million, respectively. This data supports the idea that Globe Shoppers from emerging nations may well be one of the Australian retail industry’s future growth drivers.

As Australian fashion is gaining momentum across the world with a number of local brands promoting their clean-cut yet relaxed aesthetic on social media channels, international luxury brands have also penetrated the Australian market. The country experienced an endless stream of luxury store openings in 2016. Euromonitor, cited new luxury

MALAYSIA: TRULY ASIA According to the World Travel Tourism Council (WTTC), travel and tourism contributed to 13.7% of the country’s GDP in 2016 (MYR167.5 billion, equivalent to EUR33.8 billion). It took Malaysia almost two years to recover from the 2015 terrorist attacks, yet in 2017 WTTC forecasts total contribution of travel and tourism to the country’s economy to rise by +4.2%. Certainly, the current favourable currency exchange rate and governmental agreements to revive the country’s numerous tourism attributes sent a clear message to APAC locals to consider Malaysia as an attractive travelling destination again.

New positive macro-economic factors In 2016, Malaysia welcomed 26.8 million visitors, a +4% increase compared to the previous year, as travellers increased their average stay to six nights according to

Travel Daily News. APAC region travellers continued to be the largest contributors of tourist arrivals, with a 75.7% share (9.87 million) of total arrivals according to Malaysia Tourism Board, with Singapore, Indonesia and China in the top three generating markets. Certainly, a weaker Malaysian ringgit compared to other regional currencies (Chinese yen and Singapore dollar) encouraged APAC travellers to visit the country. Stakes are high and a target of 31.8 million visitors has been set for 2017, 36 million by 2020, which would contribute an estimated MYR168 billion to the country’s GDP. Recently, a series of governmentbacked initiatives sent a clear message to APAC locals to reconsider Malaysia as an attractive tourism destination. These initiatives include increasing investment in the Travel and Tourism industry, reaching MYR20.6 billion in 2016 and forecasted to increase by +8.2% in 2017, purchasing new aircraft and supporting the construction of new hotels.

In 2010, the tourism industry was identified as a National Key Economic Area (NKEA), real driver of international investments and representing 12% of total employment in the country. Through the Tourism NKEA, the Ministry of Tourism and Culture and companies from the private sector are working on securing Malaysia as a world leading tourist destination. A tourism roadmap is already in place, the Twelve Entry Point Projects (EPPs), to focus on the country’s future growth drivers such as Affordable Luxury and Business Tourism. The Government’s campaign ‘Malaysia, Truly Asia’ actively promotes the country’s unique tourism assets such as its sandalwood beaches, iconic historical sites and local cuisine. Regarding flight connections, the cancellation of Malaysian Airlines flights from Kuala Lumpur to Beijing in May 2017 impacted inbound tourism into Malaysia. In June 2017 however, Air Asia Bhd and Tourism Malaysia signed a two-year agreement to boost tourism

Luxury on the rise According to Malaysian newspaper News Straits Times, in 2016, tourist receipts totalled RM82.1bn, up +18.8% compared to the previous year. Tourist spend on shopping represented MYR20.6 billion, a +20.3% increase compared to 2015, and positions retail as a highly attractive sector of the Malaysian tourism industry. Central Kuala Lumpur, the state of Sabah located on Borneo island and Pulau Pinang on the western side of the country boast the highest number of luxury outlets and mono-brand shops and are amongst tourists’ favourite shopping hubs. Furthermore, two dozen new

shopping centres have opened since the beginning of 2016 in the Klang Valley. MyTown Shopping Centre, Evolve Concept Mall and The Starling feature upscale supermarkets chain stores such as MaxValu Prime, gyms and cinemas as well as high luxury brands and high street brands to cater both locals’ and tourists’ needs. 24 months after the start of our operations in the country, Malaysia is now within Global Blue’s top 10 destinations in terms of Tax Free Shopping transactions. Over the last 12 months, Globe Shoppers from the APAC region were responsible for issuing the most shopping receipts, with Chinese tourists accounting for nearly half of total spend in the country with 45.6%, followed by Indonesians with 12.6% and 7.3% from Singaporeans. In 2017, Malaysia benefited from surrounding countries’ residents growth of disposable income.

From January to September, luxury sales-in-store emitted by APAC Globe Shoppers accounted for nearly 55% of total sales. The Fashion category, racks up nearly 76% of all transactions emitted, in the country since the beginning of 2017 as the Watch and Jewellery sector represents 59.08% of APAC Globe Shoppers total spend when shopping.

APAC DESTINATIONS

development through market intelligence sharing and increasing air transportation connectivity.

“Malaysia’s shopping branding will focus on “Experiential Shopping” concept that promotes Malaysia as a fun and wholesome shopping destination, complemented by entertainment and recreation activities, gastronomic adventures, luxury treatments and visits to popular tourist spots.” - Malaysian Ministry of Tourism and Culture,

KOREA: ON THE MEND? After an outbreak of Middle East Respiratory Syndrome (MERS) which considerably affected South Korea’s Travel and Tourism industry in 2015, the country finished 2016 on a high, welcoming over 14.59 million tourists and setting a new arrivals record. For the same year, the total contribution of the Travel and Tourism industry to national GDP was KRW83,013.8 billion (EUR62.3 billion) and the World Travel & Tourism Council (WTTC) predicted a +3.6% rise for 2017. But as diplomatic tensions have risen between Seoul and Beijing around the THAAD missile deployment earlier this year, Korea might have to reconsider this hopeful forecast.

Shunted results Chinese travellers represent Korea’s fastest-growing and most important market. In 2016, they accounted for 48% of all visitors to the country, reports the Korean Travel Organization (KTO), a +40% increase compared to 2015. With a tourism industry in part reliant on Chinese inbound travel, Beijing’s group tour ban to Korea in March induced a -40% plunge in Chinese visitors almost immediately. According to ForwardKeys, hotel bookings also took a hit in the second quarter of 2017, as results showed a -28% decrease for Chinese stays of four to eight nights. The revenue from Tax Free Shopping in Korea broke a record by the end of 2016, amounting to USD10.6 billion, a +31% increase from 2015 reports Inside Retail Asia, with Chinese travellers representing around 70% of Tax Free Sales (USD7.4 billion). A highly favourable

basis for comparison (2016 vs. 2015) accounts for this result, as experts predicted sales growth to slow down between -10% to -15% in 2017, prior to the THAAD missile crisis. From January to September 2017, the number of sales-in-store showed a -24% decrease compared to the previous year. Chinese still account for 65% of total spend in the country, but have posted a dramatic -37% reduction in Tax Free Shopping sales-in-store spend. Far behind, Taiwanese and Japanese are responsible for 7% and 6% of total spend in Korea. The Fashion sector posted a -17% decrease in TFS transactions compared to the previous year, with the Watches and Jewellery segment following suit with a -41.5% decrease. From January to September 2017, Korean Luxury performance showed a -6% decrease in Tax Free Shopping transactions.

Towards a more diverse tourist mix For the Korean tourism industry and retailers, working towards a more diverse tourist mix is crucial. To balance the losses from absent Chinese Globe Shoppers, the Korean government is looking to develop its marketing efforts in underserved markets reports Jing Daily. Advertising budgets have been relocated to Southeast Asian countries and Japan, and concerted efforts will be made in the APAC region’s major tourist areas such as Indonesia, Malaysia, Thailand and Vietnam. Korea is also looking beyond the APAC region’s borders, towards the American and Middle Eastern markets by developing custom programmes with these tourists’ cultural prerogatives in mind.

APAC NATIONALITIES In this section, focused on origin market Globe Shoppers across Asia, we examine the key shopping nationalities by market share and what drives them to spend in the region. Asians travelled more than ever in 2016, with a surge in trips to destinations within the region as 94% of APAC arrivals came from intra-regional travellers. Northeast Asian countries are the main origin markets, led by Chinese travellers, followed by Koreans and Japanese. In parallel, amidst positive economic conditions, travellers from APACâ&#x20AC;&#x2122;s developing nations are starting to emerge as future growth drivers for the regionâ&#x20AC;&#x2122;s tourism industry. The following pages offer a snapshot of the Indonesian, Vietnamese, Thai and Indian markets, which may well represent the future growth opportunities for the region.

APAC NATIONALITIES

CAUTIOUS JAPANESE Japanese travellers are something of a

growth drivers yet to be explored to

paradox. While the country records the

make the most of this growing number of

region’s second highest GDP and highest

outbound trips.

incomes, the impact of a long recession is hard to bounce-back from. Japanese

TTravel industry expert GDS confirms

households’ strong saving habits,

Japan’s unique travel market within the

coupled with declining disposable income

APAC region is “one of the only markets

means that in 2017, Japanese consumer

where traveller numbers have declined”,

confidence has still yet to fully recover. In

due to demographic changes. If the

fact, out of 17 APAC markets, Mastercard

number of senior travellers is on the rise,

predicts the slowest growth of outbound

job insecurity and uncertainty about the

trips will come from Japan (+0.5%) for

future is forcing young Japanese workers

2016 to 2021.

to save more, impacting their potential travel budget. Yet, Capita points at the growing number of young unmarried

Travel trends

Japanese “shunning the traditional

roles expected of them, and choosing

Yet, between March 2016 and February

to live with their parents and spend

2017, all top 10 airports in Japan have

their disposable income on technology,

seen a peak in Japanese outbound traffic

travel and luxury.” On the same note, an

says Mastercard. For stakeholders from

increasing number of young Japanese

the Travel & Tourism industry, there are

travellers chose to travel solo.

For travel providers, catering to

The Japan Times notes Japanese

Timid shopping performances

the needs of these two distinctive

preference for “sticking to what feels

demographic groups – senior travellers

comfortable over seeking adventure”

In 2017, unfavourable currency exchange

and young Japanese workers – is key

when travelling. Geographical closeness,

rates and low consumer confidence

to a more dynamic market. This could

cultural connection and safety, are the

affected Japanese spending when

include addressing some concerns that

main drivers when choosing a destination

travelling abroad. According to Global

senior travellers have when traveling

for Japanese. Japanese still favour South

Blue data, for the January to September

abroad, such as language, hygiene and

Korea as their prime travel destination,

2017 period, Japanese Globe Shoppers

security. For the younger generation,

with arrivals up by +11% for the first two

recorded a -0.5% decline of sales-in-

the development of budget airlines and

months of 2017.

store spending. In comparison, Globe

increasing web interaction via mobile A few hundred kilometres from Okinawa,

as Indonesia and India saw sales-in-

undecided young Japanese travellers.

or a three-hour flight from Tokyo, Taiwan

store spend grow by +15% and +18.5%

also remains a popular destination.

respectively.

In the APAC region, Japanese mobile

Taiwanese stores and restaurants

users spend more time on app downloads

display both Mandarin and Japanese

Japanese Fashion sales performance

than any other countries. According to

signage and sell Japanese video games

posted timid +0.3% growth while Watches

ITB World Travel Trends, travel bookings

and books or nisshiki dishes (Japanese

and Jewellrey sales have dropped by -17%.

made via smartphones and tablets have

style). Taiwan’s welcoming attitude

Japanese Globe Shoppers also seem

increased in Japan with travellers relying

towards Japanese travellers resulted in

to have taken a step back from luxury

on review sites, forums or social media to

1.89 million visitors in 2016.

shopping, with sales spend declining -4%

plan their trips abroad.

Shoppers from emerging countries such

devices or social media could help unlock

compared with 2016.

Consumer outlook

capita reached the USD20,000 milestone,

demand for outbound trips rose unusually

In 2017, South Korea has been at the

quickly. Kim Man-jin, head of Korea

centre of a couple of international

Tourism Organisation’s strategy team,

diplomatic crises affecting its inhabitants’

expects “more than 26 million South

spending behaviour and travel habits.

Koreans to travel abroad this year”, more

Against this tumultuous backdrop, the

than half of its 51 million population. South

country’s economy grew at its fastest in

Korea is one of the two developed APAC

more than seven years last quarter, as

markets (with Taiwan) where households

GDP expanded by +3.6% year-on-year

earning less than USD50,000 make up

during the third quarter of 2017, above

as much as 63% of outbound travel. This

the +3.2% projections. Bank of Korea

could mean that middle income Korean

expects annual growth to reach +3.2%

households still count travelling as one

by the end of 2017, as weak consumption

of their priorities. In a similar vein, an ITA

performances are offset by robust

Travel and Tourism Top Markets report

exports.

acknowledges “South Korean’s positive

APAC NATIONALITIES

KOREANS: RIDING THE WAVE

perception of overseas travel.” In 2016, South Korea’s middle class decreased slightly to represent 66%

By 2021, Mastercard predicts that

of its total population, as income

the majority of outbound trips will be

disparity rose in the country. In parallel,

attributed to the growing number of

a NH Investment and Securities survey

households earning between USD50,000

released at the end of 2016 revealed that

to USD100,000.

six out of every 10 middle-class Koreans feel poor. Yet, Korea’s disposable income ratio reached 5.45 in 2016, slightly up from

Travel

the previous year at 5.11 as the country’s

average salary increases.

In 2015, South Korea surpassed Japan in becoming the APAC region’s second

During 2017, as the nation’s income per

largest outbound market, defying

Mastercard’s projections that this would

years, new air routes opening across the

expecting to increase their level of spend

happen in 2019. In fact, during July 2017,

region, local low-cost carriers and tour

in this area. Korean households’ overseas

before the THAAD missile crisis, a record-

package sales encouraged South Korean

spending is quite substantial compared

setting 2.39 million South Koreans were

demand for newly diversified and more

with their domestic spending. Indeed,

going abroad.

affordable destinations.

from the second half of 2016 until June 2017, overseas expenditure was +26.5%

In the wake of international diplomatic

Longer haul favourites are still the

more than domestic telecommunication

tensions around the Korean peninsula and

US and Europe, with both regions

expenditure and +33% more than

China’s tourism boycott, the gap between

accounting for 40% of all outbound

transportation expenditure.

inbound and outbound trips is growing in

trips. The US represents the leading

2017. South Koreans are looking to escape

non-APAC destination for Koreans

Out of all six nationalities this report looks

this stressful environment and prioritise

according to Expert.gov, as it offers a

at, South Korean Globe Shoppers were

international, rather than domestic trips.

variety of activities, climates and cultural

the third most active spenders between

Not even president Moon Jae-in’s decision

experiences.

January and September 2017, posting over

to extend the annual Chuseok holiday to

EUR306 million worth of sales-in-store, a

10 days in October to encourage domestic

+15% increase compared to the previous

tourism managed to counterbalance this

Shopping

year, according to Global Blue data.

trend. Rather, South Koreans’ outbound

Yet, their average spend remains low at

travel trips have increased over the last

From July 2016 to June 2017, South

EUR408, especially compared with Globe

few months, as confirmed by online travel

Koreans spent more than USD27 billion

Shoppers from developing countries, such

agency Interpark Tour, which saw the

when travelling abroad, according to Bank

as Vietnam (EUR671) or Thailand (EUR609).

number of overseas air tickets double

of Korea, which attributes this evolution

All categories posted healthy double-digit

compared with September 2016.

to increasing international trips.

growth over this period. Luxury salesin-store posted the strongest increase

According to Brand USA, Japan remains

A Counter Intelligence Retail report says

at +18%, while Fashion was up +12%

South Koreans’ favourite destination

that 66% of South Korean travelling

and Watch and Jewellery +15%. Fashion

to visit within the APAC region, before

shoppers regard shopping as an important

accounts for 59% of total spend, far

Thailand and Australia. Over the last few

aspect of travelling, with half of them

before Watch and Jewellery spend at 7%.

APAC NATIONALITIES

PROMISING INDONESIANS

Consumer outlook Rising incomes, higher employment rates, and growing consumer confidence are all present in Indonesia, a country of 260 million people and the world’s fourthlargest consumer market (after China, India and the US). Indonesia also currently contributes around 40% of the economic output of ASEAN. The country has averaged +6% annual growth between 2007 and 2016, largely

numbers of young, affluent and brand-

Shopping

due to the increased numbers joining

savvy professionals, according to

the middle class. According to Boston

Euromonitor. With an annual income of

Indonesians are one of the top Globe

Consulting Group research, 52 million

USD4,188, they are the new wave of luxury

Shopping nations in the APAC region, with

people – 20% of the population – are

consumers in the country, who are highly

the second-highest spending between

now middle class, while the upper middle

engaged with shopping apps, aspirational

January and August 2017 (after China),

class currently numbers 44m and makes

social media like Instagram, and celebrity

buying USD405 million worth of goods

up 17% of the population. By 2020, the

endorsement.

over the period. Luxury goods purchases

middle class is projected to rise to 68

grew by +6%, while the value of their

million and 25%, and the upper class 73

shopping at contemporary and fast fashion

million and 27%. Both groups exhibit

Travel

brands increased +18%. Fashion purchases,

strong consumer confidence, which was

from across the spectrum, make up 48%

higher during 2016 than it has been for

Indonesians’ appetite for outbound travel

of their purchase, while Watches and

the past 5 years.

continues to grow with their incomes,

Jewellery makes up 19.5%.

with Mastercard Intelligence projecting However, consumer confidence and

annual growth of +8.6% over the next

Research from Euromonitor suggests that

increasing affluence has not translated to

five years, to hit 10.6 million travellers by

Indonesian men continue to drive interest

consumption in the way retailers, or the

2021. Nearby destinations are popular,

in luxury goods, with sales for men’s apparel

government, would expect. The economy’s

led by Malaysia and Singapore, but

and accessories significantly higher than

growth has largely been fuelled by

Indonesians are increasingly looking at

for women’s items. Due to the casual nature

government spending, rather than private

far-flung destinations too, with bookings

of dressing in Indonesia, branded jeans are

consumption or retail sales, which are

to European destinations rising +38% over

popular, while major luxury names such

comparatively flat. Analysts have differing

the last year.

as Gucci and Louis Vuitton are popular

theories on the reasons for Indonesians’

because they offer goods at a variety

tight purse strings. One driver could be that

While their destinations may be getting

of different price points. Meanwhile, an

could be consumers’ growing preference

more adventurous, many Indonesians

influx of new retailers in Indonesia are

for spending on experiences such as travel,

prefer the peace of mind and simplicity

broadening consumers’ brand awareness,

rather than hard goods such as furniture

offered by group trips, according to

with Alexander McQueen and Il Bisonte

and appliances.

Euromonitor. Affluent Millennials,

opening stores, as well as global retailers

meanwhile, are more likely to book trips

like Galeries Lafayette, Lotte and Sogo,

The key demographic force in the

themselves, based on recommendations

which bring labels from France, South Korea

Indonesian market are the growing

from online reviews or word of mouth.

and Japan, respectively.

CONFIDENT VIETNAMESE Consumer outlook Vietnamese consumers are generally a confident group. Rising wealth and wellbeing across the country is fuelling consumer confidence, while the growth in high net worth individuals is encouraging luxury consumption. The World Bank calls Vietnam’s economic transformation over the past 25 years ‘remarkable’, as indicated by increased spending, accelerated technological infrastructure and rising affluence levels. The result is record consumer confidence, with Vietnam becoming the fifth most optimistic country in the world in Q2-2017, up from 10th place in Q4-2016, according to Nielsen’s Consumer Confidence Index. While the country’s economy is susceptible to global economic and environmental shifts, average GDP is forecast to grow +6% annually until 2020. Consumer spending continues to steadily increase in Vietnam, with median annual disposable income rising from USD2,613 per household in 2010 to USD3,822 in 2016. In the same period, consumer spending increased by more than 80%, from EUR80 billion to an estimated EUR146 million. Spending power may be rising, but so is the cost of living: currently Vietnamese consumers spend around 60% of their income on housing, food and transportation. But, once these costs are covered, 38% are keen to spend on holidays, and 36% want to buy new clothes. With such confidence and rising affluence, it’s no surprise that interest in luxury goods is rising, with 1.5 million Vietnamese able to afford branded luxury goods, according to the EU-Vietnam Business Network (EVBN). High net worth (HNWI) and ultra-high net worth individuals (UHNWI) are growing demographics, with the UHNWI population growing +320% between 2006 and 2016, according to the Knight Frank Wealth Report.

Travel As disposable income grows in Vietnam, so does its outbound travel market, making it one of the fastest-growing outbound travel markets in the region. Increases in outbound travel are expected to outpace rising GDP over the next five years, with +9.5% travel growth compared to +6.2% GDP growth. In 2016, Vietnamese travellers took 4.8 million international trips, projected to rise to 7.5 million trips by 2021, largely driven by affluent households (those with incomes over USD30,000). Spending on travel has risen significantly in recent years, from USD3.5 billion in 2012 to USD6 billion in 2016, according to the Vietnam Tourism Association. Like their neighbours, Vietnamese travellers primarily favour regional destinations such as Thailand, Cambodia, Japan and South Korea, but travel agencies report increased bookings to Europe and the US, with European bookings rising from 1.1% of trips in 2016 to 9.3% in 2017, according to Forward Keys Consulting.

Shopping While the Vietnamese are only the ninth-biggest Globe Shopping nationality in the APAC region, their confidence, savvy and spending power makes them a key focus for the future. Vietnamese consumers spent over EUR124 million between January and September 2017, averaging EUR671 per transaction, the highest of all APAC nationalities tracked by Global Blue. Luxury purchases saw the biggest growth over the period, increasing +20%, compared to sales of Fashion goods, which grew +12.5% and Watches and Jewellrey, increasing by just +2%. The Vietnamese have a clear passion for luxury and branded goods. The EVBN report found that the majority of Vietnam’s luxury consumers, who are generally aged between 35 and 54, see luxury goods as a way to experience new things. Key brands range from sportswear giants such as Adidas, Reebok, Nike and New Balance, to trend-led retailers Mango, Zara, H&M and Diesel and contemporary brands like Theory, Acne Studios and Alexander Wang, as well as luxury names including Chloe, Celine and Givenchy.

THAI REBOUND

Consumer outlook Thailand is a complex market: it may be one of the region’s biggest economies, but it’s currently stuck in a period of low growth. Its 68 million consumers demonstrate sophisticated but conservative shopping behaviours, and as incomes rise, new preferences are emerging. Classed as an uppermiddle-income country by the World Bank, monthly per capita income is USD273 and expenditure is USD215, rising to USD443 and USD334 respectively in the Bangkok area.

Just emerging from a year of national mourning, following the death of the country’s longest-reigning monarch, King Bhumibol Adulyadej, growth of the Thai economy has slowed somewhat, with luxury and tourism sectors particularly affected due to the sombre mood in the country. Record household debt continues to put pressure on spending, and despite rising incomes, consumers’ willingness to spend on big-ticket items remains low. As a result, consumer spending is projected to have modest annual growth of 5.2% from 2016 to 2021,

according to Euromonitor. Despite apprehension about spending by many Thais, they are more confident about the ways that they spend, with online sales increasing +100% annually, compared to just +10% growth in bricks-and-mortar stores. Research from Macquarie suggests that the online retail market in Thailand could reach USD65 billion by 2020. Indeed, Thai consumers are digitally savvy, spending as much as six hours a day on social media. According to Boston Consulting Group, 40% of Thai consumers’ purchases are digitally influenced.

Travel While Thai consumers may be cautious about spending, increased travel figures indicate they are focusing their spending on travel abroad, with Mastercard Intelligence predicting that outbound travel will grow faster than real GDP over the next five years. According to the Thai Travel Agents Association outbound travel will hit 8.5 million trips by the end of 2017, up from 7.9 million trips in 2016. The majority of trips are regional, with just one million travelling beyond the region in 2016, with the UK, Germany and France emerging as key international destinations. Despite Thai travellers’ conservative expenditure, they are increasingly confident booking trips for themselves, rather than relying on travel agents or group tours.

Japan continues to be the top destination for Thai travellers, with one million expected to visit the country in 2017, a significant growth from the 800,000 who visited in 2015. Visa-free travel continues to drive travellers’ choice of destination across the region, with Taiwan attracting 350,000 Thais in 2017, up from around 100,000 in recent years. The growth in low-cost airlines is also encouraging regional travel, with new routes to India making the destination more popular with Thais. Improved flight options are also making weekend trips and longer holidays easier, with Thais focusing on regional destinations such as Singapore, Malaysia, Cambodia, Laos, Myanmar, Vietnam and the Philippines.

Shopping Reflecting the country’s current state of the economy, Global Blue figures from January to September 2017 show that Thai spending has decreased, with sales in store falling -13% compared to the previous year, or EUR233 million this year. The luxury category has been most affected, with purchases over EUR20,000

tumbling -25%. Average spend for Thai tax free shoppers sits at EUR609. Fashion attracts the biggest share of Thai consumers’ wallets, with 46.5% of spending in this category, compared to 14% on Watches and Jewellery. While Globe Shopping figures are down, Thai travellers offer much potential. They may be conservative spenders, but they do enjoy luxury – as reflected in their high debt levels. Shopping is a popular leisure activity, and Thais expect high levels of quality, convenience and service from brands and retailers. Price is rarely the most important factor when making purchase decisions, but attention is paid to fit and comfort, while international brands offering the latest styles will always attract their attention.

APAC NATIONALITIES

Two of the key demographics encouraging growth and change in Thai shopping attitudes are the growing middle class, and the country’s well-educated women, whose high employment rates, disposable incomes and digital savvy make them a valuable target.

INDIA: THE NEXT GROWTH ENGINE? Consumer outlook As one of the world’s most populous nations, India is a highly complex market. Rising incomes are starting to benefit wider swathes of the population, rather than just the educated and elite, with income inequality starting to narrow across the country. The percentage of upwardly mobile Indians has risen from 8% in 2005, to 15% in 2017 and is projected to make up 20% of the population by 2025. As a result of increased spending from the middle classes and affluent working classes (described as the “urban mass”), the Boston Consulting Group predicts that India will be the world’s third-largest consumer market by 2025. India’s enormous youth population is a key factor in growing expenditure - at 440 million Millennials and 390 million Gen Z, they outnumber even China’s young people. Recent economic and political changes have affected consumer sentiment over the last year, notably rising inflation, the introduction of a new goods and services tax, and the government’s decision to remove high-denomination currency notes from circulation, in an effort to fight bribery and corruption. While GDP has been affected by the upheaval, slowing in Q1 2017, analysts at Morgan Stanley project GDP growth of +6.4% in 2017 and +7.4 % in 2018, partly due to robust

consumer confidence. Consumer expenditure rose +4.9% in 2016 and is expected to increase +7.4% in 2017, accelerating from USD1.3 trillion in 2016 to USD4 trillion by 2025.

for India’s outbound travel market, with luxury travel expected to grow 12.8 % annually between 2015 and 2025, according to Amadeus. In comparison, overall travel is expected to grow 7.5% over the same period.

Travel International travel is within the reach of more Indian consumers every year. Many Indians travel domestically, but they are increasingly exploring regional and international destinations too. While 39% of Indian travellers plan their trips in advance, especially for long-haul trips to Australia, South Africa, USA & New Zealand, 31% like to make last-minute bookings, attracted to destinations that offer visa-onarrival, such as the Maldives, Hong Kong, Bali, Kenya and Thailand. Destinations with simple visa procedures are also popular, including Malaysia, Sri Lanka and Singapore. Singapore is becoming a key destination for Indian travellers, thanks to its role as a cruise hub. An estimated 100,000 Indians sailed from Singapore in 2016, according to the Singapore Tourism Board, an increase of +29% versus the previous year.

Shopping Spending by Indian Globe Shoppers is showing strong growth in every category, even if transaction values are lower than some of the other key APAC nationalities. Between January and September 2017, Indian travelers spent over EUR156 million, a value increase of +18.5% compared to 2016. Average spend per Globe Shopper is EUR465, with 44% of spend on fashion products and 20% on Watches and Jewellery. Spending on luxury goods, Fashion products and Watches and Jewellery grew by +14%, +16% and +19% respectively.

Significant growth in air travel is encouraging regional and intercontinental travel, helping to create the world’s third-largest aviation market by 2020 and its top market by 2030. Luxury travel is a key driver

Indian consumers’ fashion spending is on the rise across the board, with sportswear and luxury goods becoming key areas of interest, especially for India’s young and affluent consumers. Local fast fashion brands are popular, contributing to the USD67 billion Indian fashion market, while the trend-led product at international retailers such as H&M and Zara appeals to consumers at all levels of the market.

GLOBAL BLUE EXPERTISE Global Blue invented the concept of Tax Free Shopping almost forty years ago and remains the worldwide industry leader, powering 32 million transactions last year. We manage Asia Pacificâ&#x20AC;&#x2122;s largest Tax Free Shopping network, with operations in Japan, Korea, Singapore, Malaysia and most recently, Shanghai, China. The following pages review the latest Tax Free Shopping and Dynamic Currency Conversion products that we have launched over the last twelve months. In parallel, our SHOP marketing services and Business Intelligence capacities are still proving to be the most reliable tools for brands to better engage with their clientele.

GLOBAL BLUE EXPERTISE

TAX FREE SHOPPING Global Blue is committed to creating great retail experiences for Globe Shoppers and delivering value for partners through world class Tax Free Shopping and currency processing services. Our technology enables thousands of retailers across the region to quickly and safely offer Globe Shoppers VAT and GST refunds when shopping in their stores. Over the last 12 months, we have launched a number of innovations across the region to improve the Tax Free Shopping process.

IC2: Global Blue’s latest

Improving the Globe Shopper journey with

Fast Refund

in-store solution

Mobile Customer Care

This exciting service from Global Blue

Introduced in 2017, IC2 is Global Blue’s

Mobile Customer Care is our latest digital

allows Globe Shoppers to enjoy a credit

new generation of in-store Tax Free

innovation, guiding Globe Shoppers through

card refund one to three days after

solutions developed to fit our partners’

the Tax Free Shopping process via real-time

purchase and thereby provides them with

technological needs, whether they use

notifications on their mobile phones and via

a superior Tax Free Shopping service and

web, desktop, mobile or POS systems in

a mobile-optimised website.

more money to spend during their trip.

deliver innovative new features such as

At key stages of the shopping journey,

Because the Tax Free Shopping transaction

a responsive user interface, access to

Mobile Customer Care seamlessly guides

is initiated at the point of sale, there is a

transaction history, self-service account

Globe Shoppers through their entire Tax

strong link to savings when the customer

management and an in-app guide. Our

Free experience and ensures that they

shops, making Fast Refund a powerful

IC2 Mobile product also allows sales

reach the refund stage. For our partners,

sales tool for our partners. It also saves

staff to quickly and easily capture Globe

this differentiating service helps to deliver

Globe Shoppers valuable time at the

Shoppers’ passport and credit card

higher customer satisfaction, increased

airport, allowing them to skip the refund

details using the in-built camera from a

refund completion rates and greater in-

office when exiting the country.

mobile phone or tablet.

store revenues.

Whether they opt for an integrated or

The service uses transaction-triggered

standalone solution, IC2 provides the

notifications, sent to the customer’s

perfect tools for partners looking to

smartphone, containing a link to the

Global Blue are currently in the process of

improve the Tax Free issuing process,

website where they can track the status of

rolling out these new services across Asia

saving store staff time and increasing the

their refunds and be informed about the

Pacific. If you would like to know about any

efficiency at the till. For Globe Shoppers,

next required action. Other value-added

of these services or generally about Tax

IC2 delivers a smoother and quicker Tax

tools include a refund reminder option and

Free Shopping in Asia, please contact your

Free Shopping journey.

local airport guides.

local Global Blue sales team

their stores. The range of new solutions

DYNAMIC CURRENCY CONVERSION Global Blue is a world leader in Dynamic Currency Conversion (DCC) and last year powered 22 million DCC transactions through its two brands, Currency Choice and Currency Select. Operating in 16 markets across Asia Pacific, Global Blue’s DCC business offers its partners POS, ATM and e-commerce services, along with over 50 currency options. Over the last year, Global Blue implemented a number of innovations in the DCC space across Asia Pacific to grow the footprint of our business and to improve the service we provide to both our merchant partners and Globe Shoppers.

Improvements to our Customer

personnel without the need for extensive

Facing Device

technical support.

A great example is the update of Global

Previously delivered via an iPad Mini

Blue’s Customer Facing Device, designed

at point of sale, the new version offers

to improve the DCC experience for

support for multiple devices, giving

travellers within Asia Pacific. The solution

our partners greater flexibility when

delivers automatic language support

introducing the device in stores. The

based on the credit card’s country of

new version also features a completely

origin and offers a number of options to

redesigned interface, making it smoother

customise the experience through bespoke

for users.

messaging and visuals. As well as being compliant with all card

schemes, the latest version of the solution

If you would like to know more about

is easy to implement and can be used with

this service or any of Global Blue’s DCC

various types of POS terminals. This means

services in APAC, please contact your local

it can be deployed by GB merchant sales

Global Blue sales team.

SHOP is Global Blue’s multi-media marketing platform, offering products and services that help the world’s leading luxury and retail brands engage with Globe Shoppers, increase brand awareness and attract more visitors to their stores.

GLOBAL BLUE EXPERTISE

MARKETING SERVICES

At Global Blue, we regularly introduce new tools and platforms to help our partners interact with Globe Shoppers, whether Globe Shoppers are planning their trips, looking for inspiration or shopping at their chosen destination.

New website launched to inspire

Handy: helping to target Globe Shoppers

Globe Shoppers

during their vacations

In June, Global Blue launched a new

To help engage with Globe Shoppers at

website, featuring new advertising options

destination, Global Blue has launched

for partners and unique content to carry

a partnership with Handy, enabling

on inspiring the 14.8 million visitors to

its partners to communicate with

globalblue.com annually.

international travellers.

Available in English, Chinese and Russian,

Handy is a complimentary smartphone

globalblue.com guides Globe Shoppers

service that keeps guests at Asia’s leading

around the world’s key fashion cities with

hotels connected during their stay.

updated store listings and information to

Provided free, Handy helps guests explore

help them complete their Tax Free refunds

freely, with access to exclusive city guides

in over 40 cities.

and a range of promoted content.

For affiliated partners, we have developed

As well as traditional advertising

new digital advertising formats which

opportunities, Global Blue and Handy

include rich media and video content, In-

also enable partners to deliver adverts

Reads, native advertising and re-designed

and promotions to travellers via push

brand-dedicated microsites.

notifications, allowing brands to target customers based on their proximity to their stores.

INTELLIGENCE Global Blue’s Intelligence services allow our partners around the globe to benefit from the data and insights generated by the world’s largest Tax Free Shopping network, with over 32 million transactions annually. You can learn more about recent products below:

Merchant Globe Shopper Advanced

Advanced can also provide data related to

shopper demographics.

Our recently launched service, Merchant Globe Shopper Advanced, is an exciting

On top of this valuable information, the

new product for our Tax Free partners,

product also gives our merchants the

designed to provide a new way to look at

ability to understand how much share of

Tax Free spend, through the lens of Globe

wallet they are currently capturing per

Shopper reporting.

nationality.

Combining Tax Free transactional details,

Not only does this new service help our

aggregated at unique passport level,

partners understand their customers

this new reporting tool is able to provide

better, but also helps them to assess the

detailed information about Globe Shopper

current and future potential of Tax Free

purchase behaviour.

Shopping in their stores.

At a country level, the product can provide an overview of Globe Shopper behaviour within and beyond the four walls of a

merchant’s stores. Basic information

If you would like to know more about

includes foundations such as total spend

Global Blue’s marketing and intelligence

and number of forms, while in some

services, please contact your local Global

markets, Merchant Globe Shopper

Blue sales team.

globalblue.com linkedin.com/company/global-blue @GlobalBlueGroup