SHOP Global Blue Visitors Magazine | Autumn 2014 (English)

for the top 10 globe shopper nations

When to expect globe shoppers? Available for download now.

the magazine about globe shoppers | issue 11 autumn 2014

International Holiday Calendar

the magazine about globe shoppers | issue 11 autumn 2014

not just a store

Cristiano De Lillo at The Brian & Barry Building in Milan, explains why the store is more than a commercial space.

airport adventure

Is waiting at the airport set to become a joy rather than an inconvenience?

learning from the past

What can previous financial crises tell us about what to expect in the future?

faster, easier tax refunds

David Baxby, Global Blue’s new CEO, outlines his vision for the future.

corporate.globalblue.com

corporate.globalblue.com/calendar

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St Petersburg to Sao Paulo, interviews to analytics, we have the insights you need

Foreign customers spend on average four times more than domestic customers. Intelligence from Global Blue gives you the crucial edge in the battle to win their custom. Putting the insights from the world’s most comprehensive foreign customer database at your fingers tips, Intelligence brings you closer to international shoppers than ever before.

Global Blue has spent 30 years building relationships with the world’s most valuable customers, isn’t it time you started?

The world’s best shopping, better. business.globalblue.com

Intelligence

content

6 what’s up —

News and facts affecting your international customer business.

8 12 professionals trends — Three successful businesses explain why good service will always be integral.

— Will people soon be travelling to airports, and not just through them?

16 insight —

By looking at the past, we can learn a lot about how financial crises impact global shopping.

32 global news — All the latest news from Global Blue.

22 up close

— David Baxby, the new CEO of Global Blue, shares his management philosophy and vision for the ­industry.

29 30 smart business dreams — Mobile connectivity is breaking down the distinction between shopping online and in-store.

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Under the sea, in the middle of the Indian Ocean – hotel rooms don’t get much more exclusive than this.

34 market outlook

— Take a closer look at the numbers that reveal much about who is buying what, and where.

This magazine is published by Global Blue.

Website: corporate.globalblue.com | Email: visitors@globalblue.com | Project Manager Global Blue: Marie Bergfelt, mbergfelt@globalblue.com | Editorial board: Khalil Achkar, Hulya Aslantas, Marie Bergfelt, Antonella Bertossi and Simon O’Connell, Global Blue. Mathias Lövström, Carina Munk, and Rasmus Winther, Spoon. | Editorial production: Spoon, Göteborg, Sweden | Editor: Carina Munk, carina.munk@spoon.se | Art director: Mathias Lövström, mathias.lovstrom@spoon.se | Website: www.spoon.se | Repro: Spoon, Göteborg, Sweden. | Printed by: Lenanders Grafiska, Kalmar, Sweden. | Translation: Språkbolaget, Göteborg, Sweden. | Advertising contact: Stefanie Steegs, ssteegs@globalblue.com |

editorial The journey towards a revolution Today’s global travellers are more pressed for time than ever before: they want quicker and better solutions when they travel. Before joining Global Blue, I spent over ten years at Richard Branson’s Virgin Group where everything we did was focused on the customer. At Global Blue, I believe we have huge opportunities to make global tax refunds smoother for travellers. We have already started this journey by investing millions of euros in new software and systems; the next step will be to change the way we offer tax refunds forever. A win-win situation for both travellers and retailers.

Inside this issue of Visitors, you can read more about my vision and strategy for Global Blue. We also take a look at how several leading airports are transforming themselves from transport hubs where people kill time waiting into top-class shopping centres and entertainment centres. And, we visit some of Global Blue’s retail customers in Istanbul, Milan and Marrakech to see how our solutions make life easier for their shoppers.

And, when you’re done reading about trends and challenges, why not switch off – like me – and dream about a visit to the Manta Resort’s under­ water hotel off Zanzibar, in our Dreams section.

david baxby President & CEO, Global Blue

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visitors portraits

cristiano de lillo

The Brian & Barry Building General Manager

“The Brian & Barry Building is not just a commercial space – we like to call it an experience.”

ebru karacam General Manager, Armaggan

“Our customers want exclusive, timeless products with heritage that add something special to their own world.”

brendan regan

Head of Marketing at Russell & Bromley

“Naturally, how people expect to be treated as customers is different in different cultures so we are working hard to meet those expectations.”

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harrods’ new shoe heaven For those that worship at the altar of Louboutin, Manolo Blahnik and Jimmy Choo, Harrod’s new luxury shoe emporium is set to become a place of pilgrimage.

The world famous department store has opened a huge new shoe department, offering over 100,000 pairs of shoes from over 55 designers.

With 17 elegant boutiques presenting entire collections from brands such Chanel, Dior, Louis Vuitton and Valentino, it’s a shoe lovers’ heaven.

To celebrate the launch, Harrods has revealed the limited edition Silver Linings collection, showcasing 37 of today’s most iconic shoes in silver, created exclusively for Harrods by top designers. The range includes silver leather Kitty flats by Charlotte Olympia and silver Valentino Rockstuds.

Grand marble lobbies, thick carpets and velvet sofas complete the five star shopping experience, with private shopping suites for VIPs available.

Harrods, 87–135 Brompton Road, London SW1X 7XL, +44 (0)20 7730 1234

alexander mcqueen opens doors to new flagship store in tokyo Alexander McQueen has joined Givenchy, Prada and Balenciaga by opening its first flagship store in the Aoyama district of Tokyo.

Designed by Creative Director Sarah Burton, the new store is set over two floors and will house both men’s and women’s collections.

The store will also be a platform to buy all the latest runway looks, ready-to-wear designs and accessories, as well as showcasing iconic McQueen pieces such as the classic skull scarves and knuckle box clutches.

The flagship houses artwork commissioned from contemporary Japanese artists. The new store concept makes for a unique shopping experience exclusive to Tokyo.

Alexander McQueen, 5-1-3 Minami Aoyama, Minato-ku, Tokyo 1070062, +81 (0)3 6861 0910

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what´s up new figures

–16%

As recently as two years ago the Japanese were the third highest spenders worldwide when it came to Tax Free Shopping.

In the second quarter of 2014 Tax Free Shopping worldwide by Japanese globe shoppers fell by –16%, and they now rank as only the eighth most valuable nation in terms of Tax Free Shopping.

116 million

Last year even conservative estimates put the number of Chinese international tourists at 98 million – and this year it is expected that Chinese citizens will undertake at least 116 million outbound trips.

–14%

The Chinese – who are by far the most important foreign customers in Paris – have been arriving in record numbers (well over a million visited Paris last year) but they have started to spend less on shopping.

In May, their total spend on Tax Free Shopping was down –14% year-on-year, while in June the total spend by Chinese globe shoppers was down –12%. Given that the Chinese account for around 35% of total foreign spending on Tax Free Shopping in Paris, this is a significant reverse.

success is getting what you want. happiness is wanting what you get. dale carnegie American writer and lecturer

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mcarthurglen athens outlet centre successful Leading retail group McArthurGlen Designer Outlets opened a new outlet centre in Athens a few years ago, and it’s proved to be a hit. The complex is arranged over two levels and offers an excellent selection of fashion, beauty and homewares at discounted prices.

Seek out designer labels such as Alberta Ferretti and Moschino, as

well as youthful favourites including Diesel and Replay. Shoppers can also enjoy international cuisine; sample Italian coffee at Piazza di Nero and Greek frozen yogurt at Yasu.

McArthurGlen Designer Outlets, Block E71, Gialou, 190 04 Athens, +30 21 0663 0840

miu miu to open in istanbul’s zorlu center Prada’s fun and fabulous label Miu Miu has opened a second store in Istanbul. Set in the prestigious Zorlu Center, the new store was designed by architect Roberto Baciocchi.

Its sleek interior features reflective steel alcoves, marble flooring and golden damask-lined walls.

Sofas in the same shade allow shoppers to relax as they browse the ready-to-wear, leather goods, footwear and accessories collections.

The Zorlu Center offers a wide range of restaurants and cafés, and a huge selection of global brands, all under one roof.

It artfully combines an indoor and outdoor space to create a highly modern and exclusive shopping ex-

perience. It has more than 200 shops, including designer brands such as Dolce & Gabbana, Christian Dior, and Burberry. With many labels coming to Turkey for the first time, the Zorlu Center is a must-see for fashionloving visitors.

Also situated within the complex is Raffles İstanbul Zorlu Center, where guests can benefit from thoughtful touches such as a personal butler service – perfect after a day exploring the shops. The hotel also has two gourmet restaurants, a bar, an indoor and outdoor pool and helipad.

Miu Miu, Zorlu Center AVM, Beşiktaş, +90 (0)212 353 6028

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ebru karacam General Manager, Armaggan 8

professionals

everything depends on service how does a business grow from being a local shop into a global iconic store? meet three world-renowned businesses that attract an international clientele by offering something unique and exclusive, but still understand that providing exceptional customer service is essential for success. armaggan istanbul, turkey —

Opened: 2010 Number of employees: 126 Retail stores: Nuruosmaniye and Nişantaşı districts in Istanbul, Turkey Global Blue customer since: 2010 Global Blue service: Tax Free Shopping

By Alannah Eames, Lina Törnquist and Nic Townsend Photo Büşra Yeltekin for TLmag (courtesy of Pro Materia), Michael Robert Williams and David Yoder

Visitors

Armaggan – which comes from the Turkish word “armağan” meaning “a gift” – has been selling limited edition handcrafted jewelry, art, naturally dyed textiles, leather and home textiles created by well known Turkish designers since 2010.

After spending 12 years in the luxury goods industry, Ebru Karacam joined Armaggan as General Manager. “It’s a very special company – it is a luxury, niche brand, but Armaggan is also an authentic, timeless, socially responsible and innovative company,” she says.

Today, Armaggan has two stores in Istanbul – one in the exclusive Nişantaşi shopping district and one in the old town, close to the Grand Bazaar.

It also owns the Armaggan Art & Design Gallery, which showcases the works of aspiring young artists, as well as a guest house, Armaggan Bosporus Suites, oozing with Turkish design, original paintings and exquisite antiques. no 11 Autumn 2014

Customers from all corners of the world flock to Istanbul to buy Armaggan products. “Our target customers are sophisticated people who value the past, present and future and appreciate contemporary design and the authenticity of cultural heritage in a uniquely crafted form,” says Karacam. “They want exclusive, timeless products with heritage that add something special to their own world.”

Armaggan is now looking at expanding to the Middle East, USA and UK. As it attracts an increasingly international clientele, Karacam has turned to Global Blue. “By providing detailed reporting and analysis, Global Blue offers important support for our sales efforts,” she explains. “The VIP customer service, for example, is a top quality service where our customers are picked up from their hotels in a private car and accompanied to complete their tax refund procedure.” ▪ 9

brendan regan Head of Marketing at Russell & Bromley

russell & bromley —

Established: 1879 Employees: approximately 1,000 Locations: 45 (so far only in the UK) Global Blue customer since: 1999 Global Blue Services: SHOP London Magazine, FAM Tour Event, which brought 15 key tour operators from China, Pre-Travel Marketing distributed through “Shop the World” kiosks in China, Microsites, Pop-up location maps in Chinese, Cultural Sales Training Days, Tax Free Shopping

Family-owned retailer Russell & Bromley has been in the business of selling quality footwear in the United Kingdom for over 135 years. Until a decade ago, its clientele was largely British.

“Today, sales growth is being driven by sales to international visitors coming to London from Nigeria, China, Russia and the United Emirates,” explains Brendan Regan, Head of Marketing.

Indeed, during 2013, the company saw sales to Chinese customers double, even as the growth in overall spending by Chinese visitors lagged in the UK. Brendan Regan thinks Russell & Bromley’s popularity among globetrotters is due to a number of factors. High quality is one aspect that resonates well with international customers: “We deal with small factories in Italy, Portugal and Spain, so we are able to maintain high standards, but also change production quickly and keep up with demand if we see that a particular style is selling well,” Regan explains.

“The other core strength of our business is our staff. We invest a lot in training and retain staff for a long time. For my own part, I’ve been with the company since I was 15 and I have stayed for this long because I am always provided with new challenges.”

Of course, the fact that fashion icons including Kate and Pippa Middleton, as well as ­Viviandan and Miumiu, two Chinese twin 10

sisters who are celebrated fashion bloggers, have been wearing Russell & Bromley recently hasn’t hurt the company’s credibility among its customers either.

Now Russell & Bromley is meeting the influx of non-English speaking clients by recruiting more native Mandarin and Russian speakers as shop floor staff. Recently, the retailer also participated in Global Blue’s cultural sales training course to better serve overseas customers from Russia and China.

“We put a lot of emphasis on good service. Really, I would defy you to go to any of our competitors and say the service is better. Naturally, how people expect to be treated as customers is different in different cultures so we are working hard to meet those expectations,” says Regan. ▪

brian & barry —

Established: 1986 Stores: 14 Employees: 90 Global Blue customer since: 2004 Global Blue services: Tax Free Shopping, Currency Choice

cristiano de lillo The Brian & Barry Building General Manager

For nearly thirty years, Brian & Barry has been synonymous with high-end fashion and being at the forefront of the latest trends and innovations. Today, the company has 14 stores located in northern Italy, and in 2014 opened its biggest and boldest store yet – The Brian & Barry Building, located in the centre of Milan.

Covering twelve floors, the new store offers a wide range of fashion from the traditional to the contemporary, as well as luxury accessories, beauty products and a number of restaurants with a range of different cuisines and dining experiences.

“The Brian & Barry Building is not just a commercial space – we like to call it an experience,” says Cristiano De Lillo, The Brian & Barry BuildVisitors

no 11 Autumn 2014

ing General Manager. “We have selected and put together many small experiences which are all part of our lifestyle ideal, because we believe it is important to satisfy our customers daily in various forms.”

With many customers coming from abroad, Tax Free Shopping forms a vital part of Brian & Barry’s service, and for this reason the company has been working closely with Global Blue for over a decade. In fact The Brian & Barry Building is adorned with Global Blue posters, reflecting the importance of Tax Free Shopping.

“Service is primary and Global Blue has helped to expand our offer,” adds De Lillo. “It is a pleasant complement to our core business and it’s a brand that reinforces our prestige.” ▪ 11

destination: airport trends redefining the passenger experience

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trend

traditionally, airports have been gateways to destinations – but with increasingly more shops, restaurants and leisure facilities, airports are quickly becoming destinations in their own right.

By David Nikel Photo 123rf

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As the airline business continues to undergo massive restructuring with many flag carriers cutting costs in the face of fierce low-cost competition, airports are moving in the opposite direction. With air traffic and the numbers of international transit passengers on the rise, the modern airport competes with not only other domestic airports, but hubs on different continents. The “Destination Airport” concept is fast becoming a key element of

a city’s infrastructure and marketing strategy, particularly in emerging markets.

Seoul’s award-winning Incheon International Airport terms itself “more than an airport” – and with good reason. It is home to a golf course, spa, ice skating rink, museum, indoor gardens and even a casino.

Once little more than a glorified bus station, the airport is now part of the modern travel experience for all travellers, business or leisure.

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a new crossroads of the world With clear long haul strategies from Emirates, Qatar Airways and Turkish Airlines leading the charge, the Middle East has positioned itself as the crossroads of international air travel almost in the blink of an eye. Geographically it makes sense as the region is uniquely situated within long haul flying distance of every continent. Many passengers don’t set foot in Dubai, Doha and Istanbul respectively, but nevertheless spend time and money in the airports. What this trend means for the traditional European transit hubs such as London, Paris, Frankfurt and Amsterdam remains to be seen.

the intelligent airport The smart airport is nearly here. With self check-in now expected by frequent flyers, the focus is moving to unassisted bag drop to complete a seamless automated check-in process. Less than 20% of airports currently offer unassisted bag drop, but this is expected to more than treble by the end of 2016.

Further investment in business intelligence platforms featuring geolocation technology offers airports the ability to better track the movement of aircraft, passengers, and staff. Flight information can be better shared with passengers and across airport services, potentially reducing turnaround times and delays. From a retail perspective, geolocation could empower stores to offer customers special offers when they arrive or pass by the outlet.

Touchscreens at Singapore’s Changi Airport allow the “crowdsourcing” of real-time customer satisfaction data, permitting airport management to provide quick response fixes. Whether it’s by opening extra security lanes or deploying cleaners to the WCs, crowdsourcing results in a quick response, typically before a passenger would have even reported a problem.

3 transit hotels Unlike their traditional airport hotel counterparts, the growing number of transit hotels don’t require a taxi or bus ride to/from the airport; they are located inside the terminal itself.

To support the diversity of guests working in totally different time zones, several intriuging charging models are in operation. Zurich Airport offers rooms by night or by day, or a rest area featuring reclining chairs with lockers to store your valuables. The Novotel Suvarnabhumi Airport in Bangkok charges for 24 hours from when you arrive, while Singapore’s Changi airport offers rooms in six hour blocks. Whereas traditional airport hotels tend to be budgetfriendly, the newer breed aim at the luxury business market, often with five star facilities.

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luxury shopping

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how do you like your eggs?

Premium brands such as Kurt Geiger, Ted Baker, John Lewis and Michael Kors are lining up to locate themselves inside London Heathrow’s brand new Terminal 2.

At LAX, the Tom Bradley terminal houses miniature shopping districts, including “Luxury Island” and the “Boutique District”, the latter inspired by Los Angeles’ very own Rodeo Drive. Together with the Fields shopping centre located next door, the shopping centre within Copenhagen Airport forms the largest shopping district in Scandinavia. The reason airport shopping centres now focus on luxury items instead of travel essentials? A guaranteed captive market of ever-increasing numbers.

transport integration The rapid expansion of the Qatari capital Doha was structured, at least in part, around plans for the new $15bn Hamad International Airport. Meanwhile in Europe, Amsterdam Airport Schiphol is already well linked to Amsterdam city centre by train, but the airport-Utrecht route was particularly hard hit by breakdowns last year. In an attempt to increase confidence in its service, Dutch Rail is trialling a new transport guarantee service. For a surcharge of €5 on the standard ticket price, in the event of delays, passengers will be given a free taxi directly to check-in, and if that fails, the cost of rebooking the ticket will be covered.

Airport lounges used to be aimed squarely at the business traveller, providing reliable wifi, desk space, snacks, and a quiet place to work between flights. Newer lounges are becoming attractions in themselves, none more so than the new Turkish Airlines CIP Lounge at Istanbul. Along with the typical business facilities, there are facilities for families, a library, pool table, film theatre and even an ondemand omelette station. Its bright airy design and large capacity (there’s space for an astonishing 2,000 people) means it rarely feels crowded. Elsewhere, the Virgin Atlantic Clubhouse at New York’s JFK offers a full cocktail bar service, while Etihad’s Diamond First Class Lounge in Abu Dhabi offers nannies to help keep the children occupied.

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insight

the new normal as a global industry, intertwined with so many national economies, tax-free shopping is vulnerable to peaks and fluctuations, and every crisis has a direct impact. we take a closer look at how previous downturns have affected international travel and spending habits, and ask what this will mean moving forward and how we should respond to any future crisis.

By Simon O’Connell Photo 123rf

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A

s we enter a period in which slower growth in Tax Free Shopping seems inevitable, it’s worth looking to the past, to examine the phenomenal growth and resilience of Tax Free Shopping over the last two decades.

No matter what the disaster, international travel and shopping have increased. In this article we will see how Tax Free Shopping has coped with previous challenging environments, and how long it took to return to growth.

2014 thus far has been the first year in which total spending on Tax Free Shopping has fallen, albeit slightly, for many years. The main driver of this has been the depreciation of globe shoppers’ home currencies against the euro and Singapore dollar.

Even in 2008/9, in the aftermath of the financial crisis, Tax Free Shopping grew by +7% in the year as a whole.

Emerging economies were relatively unaffected by this crisis, but Europe bore the brunt of the global recession and the euro dropped against almost all major traveller currencies (the Rouble being the main exception, since it fell even more than the euro in 2009 – but then bounced back).

For more than five years it seemed the benign conditions Tax Free Shopping was enjoying (low euro

THB EUR

Development of the Thai baht compared to the euro over the last year

0.0240 0.0235 0.0230 0.0225 0.0220

Nov 1, 2013 Jan 1, 2014 Mar 1, 2014 May 1, 2014 Jul 1, 2014

/ strong traveller currencies) would last forever. But now the euro is on the rise and many of the economies of Global Blue’s major tourist groups are looking shakier than they have for years. Certainly, the euro has gained against almost all tourist currencies in the last year.

In 2014, we are entering a period we may call The New Normal: one in which European economies gradually recover from their long recession, and the euro strengthens. This is good news for Europeans going on holiday – but very bad news for globe shoppers visiting Europe – who find their spending power severely curtailed, even with the benefit of a tax refund.

15 years of tax free shopping This is not the first time Tax Free Shopping has had to cope with major shocks, be they political, natural disasters, wars, or economic meltdowns. Here we list a few of the shocks that have affected sales to various nations in the past, and assess how long the disruption lasted.

1998

the far east financial crisis Years of overspending led to a recession. Travel to Europe from Japan, Hong Kong and Malaysia dropped by –50%, hitting Italian, French, and UK businesses in particular.

In September 1998 the Russian rouble devalued – people rushed to the banks, only to find their savings blocked. Russians stayed at home and Finland saw a –40% drop in sales.

At the same time the US dollar was weakening against the British pound, making matters worse.

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1999–2001 the argentinean business gets off to a shaky start

The company opened its first South American tax refund destination, Argentina, in 1999, and initially things went slowly due to the strong peso. But more trouble was on the horizon; the national airline Aerolineas collapsed, and tourism dwindled.

In 2001, Argentina devalued the peso and the country experienced chaotic scenes as GDP fell –11%. However, a crisis can often bring a silver lining for the tax refund business and devaluation meant Argentina became an inexpensive place to visit, and goods there very cheap. In just one year, tax refunds grew by +500%.

insight

IDR EUR

Development of the Indonesian rupiah compared to the euro over the last year

RUB EUR

0.0001

0.0235

0.0001

0.0225

0.0001

0.0215

0.0001

0.0205

0.0001

Nov 1, 2013 Jan 1, 2014 Mar 1, 2014 May 1, 2014 Jul 1, 2014

The future is very hard to forecast (who can predict wars or earthquakes or even sub-prime mortgage crises?), but it’s reasonably safe to assume that for the next few years the euro will be stronger than it has been in the last five years compared to the main globe shopper currencies. This will affect Tax Free Shopping.

The one traveller currency that has remained strong throughout this period, and remains so, is the Chinese yuan renminbi. Tax Free Shopping by Chinese globe shoppers has continued to grow in 2014, albeit at a much slower rate, and there are a number of reasons for this slowdown, which briefly are: • The new Chinese Tourism Law – which prevents

0.0195

Development of the Russian rouble compared to the euro over the last year

Nov 1, 2013 Jan 1, 2014 Mar 1, 2014 May 1, 2014 Jul 1, 2014

‘forced shopping’ and tours subsidised by kickbacks • Travel ban on Chinese officials • Government austerity and anti-corruption drive • Bad publicity about robberies on Chinese tourists in France • Chinese people shopping more at home • Latest wave of Chinese tourists spending less on shopping Therefore, at this moment it’s safe to assume we are not going to see a repeat of 2012 when Tax Free Shopping by Chinese globe shoppers shot up by +58% yearon-year, or 2010 when it rocketed +81%. ▪

“the euro is on the rise, and many of the economies of global blue’s major tourist groups are looking shakier than they have for years.”

2001–2002

2003

The year 2000 and most of 2001 were great for the tax refund business with Eastern Europeans pouring into Western Europe eager to shop and benign conditions worldwide. Russia had emerged from the 1998 currency crisis. Then came the terrorist strike on The World Trade Centre.

In October 2001 US arrivals in Europe were down year-onyear by –28% and Japanese arrivals by –38%.

2002 was a very bad year for global tourism. Then, in 2003 the euro began strengthening against the US dollar and the Yen, the two largest tourist currencies for Tax Free Shopping.

The only good news was that the first evidence was emerging of the massive boom in Chinese outbound travel, and the Russians were back spending.

This was one of the most difficult years for the travel industry in its long, seemingly inexorable, upwards march. In March 2003 SARS broke out in South-East Asia, resulting in vast numbers of cancellations by Japanese travellers.

Some redirected their travel away from Asia to Europe – but not enough.

Japanese travel during Golden Week at the end of April 2003 fell by –40% to Asia, by –50% to North America, and by –26% to Europe.

Even Americans, concerned about SARS and the Iraq war, arrived in fewer numbers: –8%. The weakness of the US dollar and Yen made things even worse.

the 9/11 disaster in new york

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sars

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“tax free shopping was saved by the enormous boom in outbound travel and shopping by chinese visitors, a trend that continues today.”

2008–2009 the sub-prime mortgage crisis

The first rumbles of impending troubles were heard in the USA, Spain and Ireland in 2006/2007 where long term housing booms came to a halt and started to go into reverse.

Other elements of the crisis first became visible during 2007, and then several major financial institutions collapsed (notably Lehman Brothers) in September 2008, with significant disruption in the flow of credit to businesses and consumers and the onset of a severe global recession.

The crisis had serious, long-lasting consequences for the US and European economies.

The US entered a deep recession, with nearly 9 million jobs lost during 2008 and 2009, roughly 6% of the workforce.

While US visitors account for only around 4/5% of total spending on Tax Free Shopping, the crisis also led to a devaluation of the Russian Rouble, and this had a negative effect on spending since the Russians are far more important shoppers.

Yet Tax Free Shopping continued to grow, as we see on the right.

As this chart illustrates, Tax Free Shopping was saved by the enormous boom in outbound travel and shopping by Chinese visitors, a trend that continues today.

2010–2013

a weak euro provides a silver lining to the recession for europe’s retailers.

The financial crisis in Europe staggered on for years in Europe leading to recessions in many countries coupled to austerity measures. However, this led to a weak euro, which meant that visitors from China and Russia in particular (as well as Thailand, Saudi Arabia, and Malaysia among many, many others) could go on a massive Europe-wide shopping spree.

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increase in tax free shopping 2008–2010 over previous years (%) 100

80

60

≠ China ≠ Russia ≠ World

40

20

0

-20

2008

2009

2010

The simplest way to shop tax free Join. Shop. Swipe. Save

The Global Blue Card. Save up to 19%* when you shop abroad at the world’s favourite stores. Sign-up now. www.globalblue.com/register

*Subject to local conditions.

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up close

david baxby: you have to deliver on your promise

david baxby joined global blue on april 10, 2014, after almost 10 years at richard branson’s virgin group. in his first official interview for visitors magazine, he explains what attracted him to global blue and how he plans to apply the strong customer focus mantra he learned at virgin to ensure global blue becomes even more customer-centric in the future.

Visitors

no 11 Autumn 2014

By Alannah Eames Photo Fred Merz

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Ra ve tib re au

Y

ou spent almost a decade in the airline industry with the no-frills, customer-focused and innovative Virgin Group. What attracted you to the position of CEO at Global Blue and the tax-free shopping industry?

“For me, the appeal of this job was the exposure to emerging market travel. Having spent time in Asia and with Virgin, I’ve seen a strong trend in emerging market travel, which is a huge growth opportunity, so this new job and challenge suited me perfectly.

“At Virgin, my previous role was running Richard Branson’s holding company for his different business units. When you work in a holding company, you always feel a bit disconnected from the business; I like to be closer to the action and the customers.“ What experience do you think you bring with you?

“The traveller’s perspective. I spent ten years working closely with Richard Branson, who is always thinking of how to make life easier and better for the end consumer.

“I think Global Blue has great relationships with its customers – the merchants and retailers - but the consumer often does not have a voice in our decisions

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and developments. I think we need to start listening more to what the shopper wants.

“For example, I think it’s unacceptable that a traveller has to stand in a long queue waiting to complete the paperwork to get a tax refund. We need to make this process quicker and safer. When I say ‘safer’ I mean travellers should rest assured that they will receive their refund and not worry about it getting ‘lost’ or not paid.”

How would you define your management style?

“Direct. Open. Decisive. Transparent. Collegiate.

I tend to wear my heart on my sleeve. I have a partnership approach to issues as I like to find solutions together with customers. I always base my decisions on facts, never on personal assumptions or emotions.”

You joined Global Blue in April 2014. What are your first impressions of the company?

“Global Blue has a very strong family-like culture.

I joined as an outsider and many people have worked here for years, but I was made to feel very welcome from day one. It’s also very much a ‘can do’ culture – people bend over backwards to make things happen.

“Global Blue is a very multicultural and outward looking company. We operate in 43 countries world-

up close

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“travellers don’t want to wait a long time to get their money back so we’ll see more alternative ways of refunding them their money.”

David Baxby

wide so our business and outlook is truly global. And, our senior managers are from Southern Europe, South America, Germany, Switzerland and Sweden. It’s this combination of a very international work style, a diverse mix of people and a global business setup, which makes Global Blue a very interesting company.

“Over the years, Global Blue has moved from being a small niche player to a large global business. I believe we have a lot of opportunities to grow.”

As a newcomer to the company, where do you see these opportunities?

“Getting a tax refund is much more than filling out a piece of paper and waiting to get your money back.

There’s a lot we can do to make the process simpler, Visitors

no 11 Autumn 2014

david baxby From: Sydney, Australia.

Based: At Global Blue’s head office in Eysins, Switzer­land Family: Wife Selina and three daughters (Zara, Imogen and Amelia).

Hobbies: Cycling, skiing, rowing and travelling.

Background: Holds a Bachelor of Commerce (majoring in accounting and finance) and a Bachelor of Law (hons) from Bond University in Australia. Worked in corporate finance and as an investment banker for 10 years with Goldman Sachs in Sydney and London, where he advised the Virgin Group on its IPO. Joined Virgin in 2004 as CEO of Virgin Management Asia Pacific and Global Head of Aviation based out of Geneva, Sydney and Shanghai. In 2011, he became Co-CEO of the Virgin Group.

Likes: “Being part of a team. Growing up I did a lot of rowing.

It’s very much a team sport; if someone doesn’t show up, you can’t row.”

Dislikes: “Complacency drives me nuts. So does a lack of transparency and clarity.”

Inspiration: “People doing things they didn’t think was possible.”

quicker and better for the end customers, i.e. the shoppers. Travellers don’t want to wait a long time to get their money back so we’ll look at more alternative ways of refunding them their money. I think we’ll see a shift away from using cash as a form of repaying taxfree refunds.

“The investments we are making in the next 12 to 18 months in our technology will greatly improve tax refund transactions for end consumers. We have invested around EUR 50 million to remove a lot of the consumer’s pain points, which I think will also make our merchants happy. Now, the technology is in place and we just need to keep rolling it out.”

How open do you think the global shopping industry – merchants and shoppers – is to accepting technology changes?

“Our technology simplifies the tax-free refund process. So the next step is to convince the merchants – and consumers – why going down this path makes sense. Ten years ago, people took traveller checks with them when they went abroad and paid with cash or checks. Today, most travellers withdraw money from ATMs and electronic and card payments are the norm, replacing cash. I see this kind of revolution also happening in Tax Free Shopping.

“But we can’t convince everyone at once. We have to build our case step by step. So far, the French and Singaporean governments have been very open to change and they are a good starting point to try out our new solutions.”

Richard Branson is one of the world’s best known and most charismatic entrepreneurs. What did you learn from his way of doing business?

“The reason he is successful in business is because he injects his attitude to life and business into his 25

“at the moment, it can take up to three weeks for a customer to get their money back. within the next two years, we want to reduce this time to instant refunds or refunds within ten days.”

David Baxby

brand. He manages by listening to his customers’ feedback. He’s not big into hierarchy, formalities or rules.

“For him, it’s all about improving and how to do things better. Richard’s mantra – and mine – is about giving the customer good service and delivering on your promise. After all, you’re only as good as your customer’s last piece of feedback.”

So, you come from a very customer focused background. How do you believe a Global Blue customer should be treated?

“Virgin is all about business to consumer (B2C) marketing. Global Blue is slightly different as the main customers are the merchants and the travellers/consumers have always been secondary. The risk is if you focus heavily on the customers, you can end up with unhappy end users. So we need to refocus a bit. We need to pivot from having a great platform to making a great delivery to the customer.

“It’s all about delivering on your promise. For example, shortening the length of time it takes between filling out the form and returning the tax payment. At the moment, it can take up to three weeks for a customer to get their money back. Within the next two years, we want to reduce this time to instant refunds or refunds within ten days.

“So far, the merchants have been very coopera26

tive. After all, it’s in their best interests to give their customers a good service too.”

What is your long term vision for Global Blue?

“We’re in a great position to grow as we have a unique dialogue with 35 million travellers per annum who come through our network.

“Thanks to our technology, we can gather a lot of interesting and useful information on our customers and shoppers. I think we can leverage on this data to get closer to travellers and shoppers. We should be able to share this information with merchants to help them deliver better value to their customers. I believe we can provide them with much more input than what we are giving them at present.

“Why not give global travellers an extra service, prove that we can build on the core tax free refund we give them and add more value to their shopping experience or trip. For example, loyalty discounts on travel, a VIP package including pickup at the airport, complimentary perks at their favorite hotel chain. If we add value to their experience, we can get to know them better.”

How do you see global tax refunds developing in the future?

“I think it will become paperless and almost ubiquitous and part of the norm for people. As it becomes invisible and more ‘pain-free’, people will just accept it and it will become as routine for them as printing off their online boarding pass at home or withdrawing cash at an ATM.” You still spend 50% of your time travelling. How do you pass your time at the airport?

“Personally, when I travel, I like airports where things are very straightforward. I don’t spend a lot of time at the duty-free shops but, when I do, it’s usually to pick up a present for my family.” ▪

Turn browsers into buyers with Tax Free Shopping

Foreign customers spend four times more than domestic customers. These lucrative globe shoppers are four times more likely to visit stores offering Tax Free Shopping from Global Blue.

The service offers foreign customers a saving of up to 19%*, by allowing them to claim back sales tax on their purchases.

Global Blue has spent 30 years building relationships with the world’s most valuable customers, isn’t it time you started? business.globalblue.com *Local variations apply.

Tax Free Shopping

Make spending easy, sell in your customer’s home currency

Foreign customers are happier to buy when they are sure how much they are spending. Currency Choice from Global Blue allows you to offer these globe shoppers the option of paying in their home currency. Removing uncertainty gives your customers peace of mind, while earning you commission on each transaction.

Global Blue has spent 30 years building relationships with the world’s most valuable customers, isn’t it time you started? business.globalblue.com

Currency Choice

smart business

digital meets physical In Apple Stores, staff uses iPads to take payment on the fly.

leaving the store, a nearby restaurant sends an offer, unique to her, to save 20% on lunch. Later that day the manager of the boutique reviews its visitor analytics, based on intelligence gathered from apps, and adjusts the store promotions to reflect newly-identified trends.

Millennials like Eva increasingly expect the same digital experience they get online when shopping in the physical space. Early adopters of this approach include Apple, who removed traditional checkouts from all their stores and, instead, arms its staff with iPads to take payment. In Reducing the digital/physical divide is not just about the flagship showmaking the shopping experience more seamless for the consumer. Integrated digital platforms also allow rooms of electric retailers to analyse and understand their customer car innovators base better than ever before, an advantage previously Tesla, touch-screen enjoyed only by online retailers. configuration tools offer a big

By David Nikel Photo Colourbox

Eva arrives at an exclusive boutique armed with her smartphone and ready to buy. She researched her purchase in advance so is visiting the store to try on the dress and to benefit from a Global Blue tax refund.

She connects to the in-store wifi by checking-in on Facebook to gain free access. A quick scan of her smartphone and a clerk arrives with Eva’s chosen dress to try on. The dress fits perfectly and she uses a mobile app to pay, bypassing the need to queue. Upon

customer engagement platforms

Visitors

no 11 Autumn 2014

advantage over the same tool online. Customers see their chosen model, colour and spec on a life-size screen, right next to the real thing.

These emerging technologies are not just the reserve of big brands. Integrated services such as Aerohive’s personal engagement platform and Lightspeed’s omni-channel approach allow smaller retailers to bring the best of the digital experience into their bricks-and-mortar stores.

Aerohive’s cloud-based mobile platform gives retailers a scalable way to manage their operations, from offering in-store wifi and accepting mobile payments, to integrating third-party apps into the warehouse systems. Using tools from Lightspeed, even smaller retailers can combine their ecommerce and physical operations and allow shoppers to pay with their smartphones, all from one integrated platform. ▪ 29

the kwanini manta resort Opened : 2008 Employees: 64 Accommodation: 1 under足 water room, 6 seafront villas, 4 superior garden rooms, 8 standard garden rooms Number of guests per year: 800 Top visitor nationalities: Europeans Top reasons to visit: 足Relaxation, romance, 足diving, culture

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dreams

a night in the underwater world

By Alannah Eames Photo Genberg Art UW Ltd / Jesper Anhede.

Visitors

In 2000, Swedish artist turned creative entrepreneur, Mikael Genberg, opened a one-room underwater hotel, three metres under Lake Mälaren, north of Stockholm. His vision was to create hotels where guests could go to bed at night watching – and being watched by – fish.

It would allow less adventurous nature lovers to get close to the underwater world without having to don a wetsuit.

Six years later he began expanding his concept of underwater hotels across the world to exotic locations such as the Manta Resort on Tanzania’s Pemba Island. This small spice island is said to be surrounded by some of the healthiest coral reefs in the Indian Ocean and the clearest waters in East Africa.

The resort’s Underwater Room is four metres below sea level and, from a distance, looks like a small personal floating island. A ladder leads to a roof deck where you can sunbathe during no 11 Autumn 2014

the day and stargaze at night before heading to your bed, from where you can watch Napoleon wrasses, lion fish and even turtles and white-tip reef sharks swim past or gaze curiously through the window at you.

Despite being just a 30 minute flight from Zanzibar, Pemba remains largely “undiscovered” with a strong Swahili culture and a reputation as a “magical” island due to its traditional medicine and wizardry customs. Lush and hilly with clove, coconut and mango plantations, Pemba was once one of the world’s leading producers of cloves.

The Manta Resort prides itself on simplistic luxury. Forget the pretentiousness and over-the-top fuss of a typical five star hotel. This castaway resort is all about down-to-earth comfort, providing a friendly intimate environment, peace and quiet, and letting guests reconnect with nature.

31

global news

By Simon O’Connell

tax refunds offered for first time in malaysia Global Blue’s Malaysian joint venture with IRIS Corp BHD has been selected to provide a Tourist Refund Scheme to foreign travellers visiting and shopping in Malaysia. Tax refunds across Malaysia will start on April 1 2015, when a Goods and Services Tax of six per cent will be imposed for the first time.

This is a fantastic win for Global Blue and marks the company’s 38th Tax Free Shopping market.

Travelling within Asia is forecast to continue growing significantly in the coming years, and the introduction of a Tourist Refund Scheme will establish Malaysia as a shopping paradise for international travellers. Malaysia offers fantastic shopping with some of the best and the biggest shopping malls in the world. There are presently 34 shopping malls and another 10 under construction in Kuala Lumpur alone.

Alipay’s new headquarters in Hangzhou.

alipay and global blue collaborate China’s leading online payment service provider, and Global Blue, will collaborate to enable Chinese tourists to have their VAT reimbursed directly into their Alipay accounts.

During the summer close to 10.000 32

retailers in 8 countries have started to offer this service, including Harrods in the UK, KaDeWe in Germany and La Rinascente in Italy.

To provide an even better service to Chinese travellers, the refund to their

Alipay account will be integrated with Global Blue’s membership card – Global Blue Card – eliminating the need to fill out the tax-free form by hand, and also offering an exclusive series of merchant promotions and discounts.

global news

global blue expands in ireland Global Blue is now sole owner of its Irish business, which was formerly run with a franchise partner.

Global Blue is in the process of signing up as many retail partners as possible to provide the best selection of tax-free options within Ireland.

Subject to agreement with the Irish Tax Authorities, Global Blue intends the service to become fully digital at Dublin Airport in the near future, providing travellers with an even simpler process to receive tax refunds. As part of the digital service, Global Blue Card holders will be able to use their card to call up all their tax-free transactions and personal details to speed up the validation process.

global blue staff member: daria orlova When Daria Orlova moved to London to undertake a Master’s Degree in Political Journalism, a career in fashion was the last thing on her mind.

“I was never interested in fashion at all, so I never imagined I would work in the industry. But I’ve found it extremely exciting to write about fashion and style. You could say my career mirrors that of Anne Hathaway in The Devil Wears Prada!”, she says.

Orlova works as Associate Russian Editor at Global Blue’s London office, where she is responsible for the Russian language website at globalblue.ru.

Her daily tasks include commissioning features and arranging interviews with famous Russians along with writing stories herself. She tries to make her articles “as fun and attractive for readers as possible, while still promoting the tax-free service” to keep them engaged and coming back for more.

“Sometimes it’s not enough to write good quality content. You have to think outside the box and take advantage of news momentum in order to promote Global Blue services in the most effective way”, she advises.

One successful example of

­ rlova’s work was a tongue-in-cheek O piece on Alexander Lebedev, the owner of the Evening Standard and Independent, rather than his style icon wife Elena Perminova. Lebedev, one of Russia’s richest businessmen and at the time on trial for punching Sergei Polonsky on live TV, retweeted the article, ultimately sending a huge traffic spike to the Global Blue website.

Her work is crucial given that Russians account for almost one in five of all Global Blue transactions worldwide. It’s a statistic that surprises many even in the industry, but not Orlova: “More Russians than ever before can travel freely around the world.

Together with our developing economy, Russians now have the means to travel and they do so, because they couldn’t in the recent past. We love to travel abroad now.”

“russians now have the means to travel and they do so, because they couldn’t in the recent past. we love to travel abroad now.”

Visitors

no 11 Autumn 2014

By David Nikel

Age: 27 From: Izhevsk, Russia Lives: London Docklands, UK Status: Single Hobbies: I do enjoy figure skating although it’s hard to find good venues in London, despite its size.

online support for merchants Merchants get direct access to local information and services on the Global Blue website via the My Service Centre space (servicentre.globalblue.com). This area can be used to order Point Of Sale material and Tax Free Forms, download instructions, or find information about tools and Global Blue services. Merchants can also sign up to newsletters, which help stay abreast of trends in the globe shopper market.

global blue card members reaching 500.000 The interest for the Global Blue card is quickly growing. Close to half a million globe shoppers are now equipped with the card when they go shopping. The card makes the Tax Free Shopping process smoother and quicker as Tax Free forms are automatically filled out with their personal details, and, if they have given their preferred credit card, the refund payment will also be automated. In addition to speeding up the process both for the globe shopper and the retailer, the shopper is also presented with attractive offers to make their travel even more rewarding.

33

global blue stats

every day global blue serves 100,000 globe shoppers. here we take a closer look at the tax free shopping transactions to find out who is buying what, where, and for how much?

globe shoppers sales and transaction development january–june 2014 vs 2013 All the leading nations apart from China and the USA posted negative results in the first half of 2014. Depreciation of the travellers’ home currency is the primary reason for this fall, with Russia’s drop exacerbated

by sanctions imposed due to the Ukraine crisis.

Chinese globe shoppers increased their overall spending by +17%, meaning they have extended their lead as the most valuable nation of visitors.

spending development vs 2013

transaction development vs 2013

average spending per purchase

17%

35%

726€

China Russian Fed.

–12%

–15%

366€

Indonesia

–15%

–10%

592€

3%

2%

670€

Japan

–18%

–19%

524€

Thailand

–19%

–10%

751€

United States

Malaysia

1%

3%

720€

Taiwan

19%

30%

418€

Hong Kong

11%

24%

646€

Switzerland

2%

3%

206€

top five destination countries per outbound nation The favourite destination for globe shoppers from ­China and the USA is France, while Russian and Japanese visitors prefer Italy. Singapore is a popular destination for Indonesian, Chinese and Japanese travellers. The UK is in the top 5 for all nations apart from Russia.

indonesia Singapore France Italy Germany United Kingdom

united states

china

% of total

sales vs jan–jun 2013

avg spend

France

21%

14%

1 585€

Singapore Germany Italy United Kingdom

14% 13% 12% 12%

–2% 7% 17% 12%

968€ 583€ 885€ 924€

% of total

sales vs jan–jun 2013

avg spend

japan

27% 18% 12% 10% 6%

–8% –12% –7% –31% –17%

635€ 329€ 1 126€ 136€ 422€

Italy France Singapore Korea United Kingdom

russian fed.

Italy Germany France Finland Austria 34

France Italy United Kingdom Germany Singapore

% of total

sales vs jan–jun 2013

avg spend

67% 14% 5% 3% 3%

–17% –16% –17% –6% –18%

506€ 1 628€ 917€ 542€ 701€

% of total

sales vs jan–jun 2013

avg spend

28% 24% 16% 5% 5%

11% 2% –5% –1% 1%

1 220€ 780€ 686€ 342€ 699€

% of total

sales vs jan–jun 2013

avg spend

29% 28% 13% 5% 5%

–10% –22% –20% –25% –34%

701€ 863€ 486€ 282€ 455€

chapter's market outlook name

top 10 most popular cities for tax free shopping

top 5 nationalities for tax free shopping

Retailers in Paris, London, and Singapore benefit by far the most from international shoppers. In the next group, Seoul is growing fast as a destination, overtaking Munich and Frankfurt, and now just behind Rome, the fifth most valuable destination for Tax Free Shopping.

China and Russia are by far the most lucrative countries of origin for globe shoppers, with Chinese visitors now accounting for more than a quarter of all Tax Free Shopping spend.

top 5 nationalities

Top 10 cities

China Russian Fed. Indonesia United States Japan

% of total

27% 16% 4% 3% 3%

6. Seoul 3%

Top 10 cities

3. Singapore 12%

2. London 13%

10. Berlin 2% 8. Frankfurt 2%

1. Paris: 15%

7. Munich 3%

9. Vienna 2% 4. Milan 6%

5. Rome 3%

to learn more, go to business.globalblue.com Visitors

no 11 Autumn 2014

35

for the top 10 globe shopper nations

When to expect globe shoppers? Available for download now.

the magazine about globe shoppers | issue 11 autumn 2014

International Holiday Calendar

the magazine about globe shoppers | issue 11 autumn 2014

not just a store

Cristiano De Lillo at The Brian & Barry Building in Milan, explains why the store is more than a commercial space.

airport adventure

Is waiting at the airport set to become a joy rather than an inconvenience?

learning from the past

What can previous financial crises tell us about what to expect in the future?

faster, easier tax refunds

David Baxby, Global Blue’s new CEO, outlines his vision for the future.

corporate.globalblue.com

corporate.globalblue.com/calendar

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