Walpole and Global Blue share implications of tax free shopping restrictions

Since January 1st tax-free shopping in the UK is no longer a lure for high net worth travellers with a passion for shopping. Luxury brands and retailers, despite lobbying the government with the support of many notable UK businesses and leading industry voices, have not been successful to reverse the decision which sees international customers with only the option to ‘shop and ship’.

International travellers coming to the UK can no longer buy goods without VAT and take it back themselves. The incentive of tax-free shopping in one of the world’s most fashionable cities has been dampened by restrictions in purchasing goods, which are currently cheaper in other countries.

Wealthy shoppers may avoid the UK and purchase elsewhere

Despite campaigning by Walpole, the UK’s luxury trade body, and its partners, the government has failed to comprehend the shopping behaviour of these international high net worth customers and their impact on the economy. In a statement Walpole and Global Blue said despite visitor numbers currently being negligible due to travel restrictions, there remains “an urgent imperative for the luxury industry to work through the implications of this change for future international customers, who will now lack a significant incentive to travel here to shop.”

“Tourists are price-sensitive, with variability between international markets, and alternative ways will have to be found to create a value proposition for the international customer. MIB remains in place, but the export model will prove a logistical challenge for brands in reality. ‘Shop and Ship’ is not that appealing to modern consumers who want the instant gratification of taking goods with them from the shop, something that may prompt international travellers to shop elsewhere.”

“Suggested workarounds are few at present and currently range from streamlining measures, such as the VISA Waiver scheme for the UAE, to brands taking a hit to the bottom line by offering a discounted ‘international traveller price’. Walpole and its partners will continue to fight to overturn the decision throughout 2021, highlighting to MPs the importance of travellers coming to the UK to retail and watching the judicial review in February with keen interest. When international travel does resume, it will also track the spend of UK residents in Continental Europe, as people start to learn they can hop on a train or plane and buy higher-value items for less elsewhere — building on the data set that proves that without tax-free shopping the UK will miss out to Europe on HNW consumer spending that is vital to the economy.”

Photo: London via Pexels