British retailers to benefit from retail sales from overseas consumers this Christmas
New research released from VoucherCodes, part of RetailMeNot, reveals more overseas shoppers are turning to British retailers than ever before for their Christmas shopping.
In fact, cross-border trade in the UK is predicted to reach £1,419 million this Christmas period, an increase of 57% since Christmas 2016 when sales were just £905 million.
What’s more, foreign citizens purchasing from stores based in the UK will make up one-third of total European sales from overseas retailers this Christmas.
The international study was conducted by VoucherCodes in conjunction with the Centre for Retail Research interviewing 50 major UK retailers and 1,000 British consumers.
Why are British shoppers looking overseas?
VoucherCodes and the Centre for Retail Research have also shed light on the reasons overseas consumers may want to purchase from UK retailers, and have revealed the key reasons may be to ensure a better quality item, a lower price and often faster shipment. Some merchandise items may simply not be available in certain countries or not available online.
Thus, customers turn to foreign websites by word-of-mouth recommendation and/or social media.
In principle, customers are typically expected to be more willing to buy goods from foreign online websites when there is no language barrier, where payment methods are familiar and the exchange risk is low, and if there are few customs formalities, taxes and charges.
Many websites automatically switch to the local language and payment systems as soon as the IP address has been recognised, therefore increasing the chances of converting a browser to make a purchase.
In addition, many Christmas purchases can often be spurred by nostalgia. This may drive additional cross-border trade in merchandise such as chocolate products, decorations, local delicacies, locally-made clothing or artisan-made products.
Across the whole of Europe, Christmas cross-border trade is expected to rise from £3,156 billion in 2016 to £4,300 billion in 2017 – an increase of more than a third (36.2%) from the previous year.
Meanwhile, British retailers are set to benefit from a huge year-on-year increase in purchases from foreign consumers this festive period. The UK is predicted to see the fastest growth in cross-border trade with total sales expect to increase by more than half (56.8%) compared to 2016.
The UK has a well-established online sector, the language is widely spoken and currency depreciation has resulted in merchandise becoming cheaper than previous years. As a result, purchases made on UK sites by citizens across Europe, the U.S. and Canada will make up one-third of total European sales from overseas retailers this Christmas.
Gift experiences on the rise
The report also reveals another retail trend for Christmas 2017 in the UK to be gift experiences. Almost 1 in 5 (19.8%) households in Europe will give experiences as gifts this Christmas, an increase of 15.9% since 2016.
Total spending on Christmas experiential gifts is forecast to be £1,292.16 million in the UK, and £5,443.37 million across the whole of Europe (an increase of 22.6% from 2016). This is by far the biggest growth in any other gift category when it comes to spending.
What’s more, the UK is predicted to be the second highest spending country in Europe when it comes to gift experiences, spending £1,292.15 million and coming only behind Germany.
In the UK, more than a quarter (26.3%) of households are expected to give at least one gift experience this Christmas, compared to 22.9% last year, and each household will spend an average of £172.29 on experiences, up 23.1% from last year.
Paul Lewis, Senior Director of Marketing at VoucherCodes, said: “We’re seeing a completely different retail landscape in the UK this Christmas. With so many political and economic changes taking place over the last few years (i.e. Brexit) shoppers are having to be more open minded when it comes to retail. It’s great to see UK retailers benefiting from cross-border trade this festive season, a growth of over 50% is astonishing and welcome news in what has been an uncertain 18 months for retail.
“As we move into 2018, UK retailers will need to be even more aware of how their prices shape-up compared to their competitors overseas to ensure they remain competitive, retain their existing customer base, and attract new shoppers.
“It’s likely in years to come, especially with faster delivery options and fluctuating currencies, cross-border trade will be increasingly common, and shoppers will be able to locate whatever they need at the right price from various countries.”