Tax free shopping industry on steep upward curve as Turkey tourism booms

Tax free shopping industry on steep upward curve as Turkey tourism booms

TURKEY. Turkey’s retail and tourism industries are undergoing a revival on a grand scale, according to tax refund specialist Global Blue.

The country is continuing its strong recovery from several terrorist attacks and considerable political unrest in 2016.

Retailers in travel locations, downtown stores and tourist hotspots in Turkey are enjoying boom times, Global Blue said. Lower safety concerns and a positive macroeconomic environment are benefitting the country significantly.

A weak Turkish Lira against the Euro has made shopping much more affordable and has had a positive impact on the number of tourists shopping and, more importantly, spending.

And that’s not the end of the good news, Global Blue noted. Turkey’s new mega airport in Istanbul (which will be the third biggest in the world on completion) is set to open in October 2018. It will become a major international travel hub, with flights to over 300 destinations and an annual passenger capacity of up to 200 million.

Turkey is undergoing a strong recovery after several terrorist attacks and considerable political unrest eroded tourism in 2016.

The tax free shopping sector is among the main beneficiaries of Turkey’s current steep upward curve. Global Blue said that the country is currently posting the biggest sales in store progression for its business across Europe.

The Swiss company recently announced that sales in stores involving its services in Turkey have risen by +52% in the second quarter of 2018, with the number of tax free forms it has issued rising by +3% during the same period.

Global Blue Turkey Managing Director Selim Seyhun explained that tourists from Gulf countries and Iran are contributing an important share in total tourist spending in Turkey. In the second quarter of 2018, they accounted for a third of the country’s tax free shopping spend. “We usually witness a major increase in their spending right after Ramadan,” he said.

Turkey is also benefitting hugely from the burgeoning numbers of Chinese travellers. In the year to date, their spending is seven times higher than in 2015. Over 400,000 Chinese travellers are expected to visit Turkey this year.

“From April to June 2018, Chinese spending grew by a massive +341%,” said Seyhun. “They have become the country’s best performing nationality, representing alone a 25% share of the total volume of transactions during the second quarter of 2018.”

The majority of tourist spending in Turkey revolves around the fashion and watches & jewellery categories, according to Global Blue data.

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Seyhun also noted that average spend per transaction by Chinese tourists is showing extremely high growth, rising by +48% in the second quarter of this year. “On one hand, the growing flux of Chinese shoppers and their famed taste for luxury shopping pulls higher the average spend,” he said. “On the other hand, as in most hyperinflation countries, Turkish merchants adjust their pricing almost weekly to benefit from a weak Turkish Lira against foreign currencies.”

Global Blue recently released figures which show that the majority of tourist spending in Turkey revolves around the fashion and watches & jewellery categories. Based on data from transactions performed by its customers, fashion represented 62% of total share of spend from April to June 2018, with a calendar year-to-date growth of +44% at the end of June.

The watches & jewellery category accounts for 31% of spend, with a +76% year-to-date growth in June 2018.

In terms of business sectors, luxury shopping accounts for 61% of total spending, according to Global Blue, with a +64% growth since the beginning of the year. The rest of the business sectors, such as fast fashion and mainstream, grew by +26% over the same period.

A weak Turkish Lira against the Euro has made shopping much more affordable.

Global Blue operates in numerous luxury malls in Istanbul, including Istinye Park, Zorlu Center and Emaar Square. These key shopping locations are said to account for more than 50% of total tourist spend in Turkey. Seyhun commented: “Tax free shopping is a clear differentiator for them and we also implemented downtown refund offices in these locations to improve customer satisfaction by allowing travellers to get their refund just when they are shopping.

“In parallel, we support these malls with marketing products such as airport billboards to communicate at origin markets like Abu Dhabi.

“On top of our printed products we offer a wide range of marketing products such as mega billboards and digital screens in airports and shopping malls to drive more travellers to our merchant partners’ stores.

“In parallel, merchants’ feedback to new Global Blue services such as MCC (Mobile Customer Care), our digital traveller app, are very positive and our Business Intelligence portfolio allows us to offer only the best to our partner merchants. They are also highly motivated by our digital/mobile communication tools like Ctrip virtual tour leaders and other similar tools.”

Looking ahead, he concluded: “Unless we endure new terrorist attacks, there is no reason for tourist sales to slow down and the county’s tourism landscape is evolving positively, with many new projects in line.”