Tourist spend slumps as Russians and Chinese pull back

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Spending on tax free shopping fell for the first time since 2009 in the second quarter, data from duty free shopping group Global Blue showed this week.

Between April and June, total sales in France, Italy, the U.K., Germany and Singapore – which together account for three quarters of total global spending by foreign customers – dropped 3 percent on quarter in value, the data showed.

"The drops are not down to a reduction in tourist numbers, but a decrease in average spend per transaction," Global Blue said in a statement on Thursday, according to Reuters.

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Russian and Chinese shoppers were the key drivers of the slump. Spending by Russian shoppers – who account for roughly 20 percent of tax free shopping worldwide – fell 18 percent in the second quarter, as the sharp devaluation in their local currency amid tensions with Ukraine, hurt consumers' ability to spend abroad.

In March, Russia moved to annex the Ukrainian region of Crimea which sparked growing unrest in eastern Ukraine, where pro-Russian sentiment is strong. Relations between the West and Moscow have since soured dramatically.

The rouble has weakened nearly 10 percent against the dollar year to date, as a result.

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Overall duty free sales to Russian travelers decreased 24 percent in April, 22 percent in May and 19 percent in June, the data show.

Slow consumer spending hurts retailers

Retailers in Italy – the most popular shopping destination for Russians – have been hit hard by the pullback in Russian spending. In the second quarter, sales in Milan fell 12 percent in April, 10 percent in May and 14 percent in June.

Sales to Russians also fell dramatically in London, slumping 40 percent in May, while sales to Russians in Paris fell 26 percent in May before recovering to -6 percent in June.

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Meanwhile spending by the Chinese – who accounted for 27 percent of all tax free shopping last year – rose only 9 percent in the second quarter compared with quarterly rises of between 30 and 50 percent seen in recent years.

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China's economy – which enjoyed double digit growth rates prior to the financial crisis – has slowed in recent years. Economic growth slumped to 7.7 percent on year in 2013, its lowest level since 1999. Growth in second quarter of this year came in at 7.5 percent, however, slightly higher than the first quarter's 7.4 percent rate.

Chinese shoppers remain the biggest spenders worldwide, however, while Russians are the second largest.

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French and German retailers suffered the most from the quarterly decline, with the total amount spent by foreigners on tax-free goods falling 5.2 and 4.5 percent respectively.

Global Blue is a tourism shopping tax refund company headquartered in Nyon, Switzerland.