Shopping and Travel — The Evolving Chinese Traveler

The rise of Chinese outbound tourism appears to be unstoppable, even amid growing concerns about the country’s economy. With more and more Chinese of different ages and income brackets traveling, the typical vacation is evolving. Shopping, specifically shopping for luxury goods, is still a part of the travel plans of many Chinese travelers, though there are some shifts there too.

Chinese Outbound Travel Shopper, a white paper issued by iClick, Ctrip & The Moodie Davitt Report, finds Chinese travelers are “the biggest spenders in the world.” At $258 billion US, shopping by Chinese travelers accounts for 21% of the total global spend and the average spent per traveler is twice that of US or UK tourists. Chinese tourists spend nearly 25% of their total expenditure on shopping when abroad, more than is spent on accommodation.

Last year, Chinese tourists were responsible for 25% of all non-EU tax-free spend in London’s West End, yet the overall spend was 8% lower than 2017.

Blending Shopping & Experiences

While these numbers are impressive, the shopping-travel relationship is changing.

In Paris, Millennial Chinese travelers are skipping traditional department stores for shopping that is part of a larger “lifestyle experience” and includes smaller shops and boutiques found on WeChat and Weibo.

Tiffany & Co. CEO Alessandro Bogliolo cites fewer Chinese tourists who spend less money at stores in New York and Hong Kong as a reason for “weaker-than-expected” revenue in late-2018. At the same time, sales at the company’s mainland China store are strong.

High-end brands need to continue to engage China’s luxury shoppers, who for many are the “mainstays for American and European retailers.” Chinese upper-middle-class shoppers look for luxury items they can’t get at home. Leather goods, particularly bags, and jewelry are top choices.

With more companies opening stores in China, finding distinctive items becomes even more important to outbound shoppers. Some brands are taking advantage of this by offering unique products at their retail locations outside China.

Remaining Attractive To Savvy Shoppers

The changes in Chinese tourist shopping aren’t keeping retailers from marketing to this valuable audience or from accepting Chinese mobile payments in hopes of encouraging Chinese visitors to open their wallets.

Economic forecasters, such as Euromonitor International, continue to see Chinese customers as “the luxury industry’s main growth engine over the next decade” and predict continued growth in spending abroad, “but not as fast as in China.” According to McKinsey, Chinese luxury spending is expected to rise to 44% of total global spend by 2025.

One factor likely contributing to the changes in habits is new Chinese regulations impacting luxury goods purchased outside China as well as government efforts to promote domestic consumption.

Also, more and more travelers are searching for unique experiences and opting to travel independently versus joining group shopping tours. At the same time, Chinese travelers’ spending on shopping has declined, budgets for food and beverage, and sightseeing and entertainment have increased.

Chinese travelers have become more discerning and their preferences are moving towards one-of-a-kind experiences. The iClick white paper notes this change in behavior “matches the shift of the general social psyche away from the ‘material assets’ that drove the earlier generations, towards a desire for ‘intangible assets such as a great experience and memory.”

Brands courting the Chinese shopping travel market will need to follow these evolving preferences if they want to continue to be attractive to this key market.

For more on the Chinese travel market see: China Is Shaping The Future Of Travel and East Meets West: Is Asia A Driving Force For Travel Globally?