How to prepare for the new generation of international luxury shoppers

Tourism is back. After the depths of the pandemic and a comeback to something close to normal in 2022, we’re now seeing growth in international tourism numbers on the 2019 baseline in most regions. But while travel itself is back on the kind of footing it was in 2019, travellers are not. They have changed in the four years of staying home – as has the world. Chinese tourists are still sticking closer to their own localities and Russian high-end tourists are almost all gone, while American, Middle Eastern and European markets have all rebounded. Since retailers here in the UK cannot offer the same VAT refund available in Europe, it is essential that they make their offerings unique. 

Gen Z is now a huge part of the luxury travel market, not a small segment of it, and the fastest growing group of shoppers. While this demographic's average transaction values are currently lower – reflecting their age and current purchasing power – by 2028 they will be the largest group of travel retail shoppers.

Here are my three key points that you need to think about to appeal to this new breed of traveller...

In 1950, just 3.4% of British young people went to university. Now about half of young people have participated in some sort of higher education by age 30. This pattern holds true to varying degrees across the developed world; there has been an explosion in higher education.

These highly-educated shoppers are likely to spend a lot of their working hours in front of a computer, which means they have the time and means to do quite a lot of research. They will want to understand the history of where they travel to and, quite possibly, the history of any object they buy. 

This is where purpose-driven spending comes in. Higher education is highly correlated with a greater concern about social and sustainability issues (such as climate change). That means being a brand with a purpose, and educating shoppers on that purpose, is key to attracting them. You can’t just shout about being “organic” any more either - not when your competition might have worked out a way to be carbon neutral or carbon negative, and wear this fact proudly. If you want an example, look at LVMH’s move to carbon-negative packaging. 

There is a tendency for consumers to say they want eco-conscious products, but then pick a cheaper, less sustainable product when they see the price difference. However, this is not a trend you can ignore, especially if you want this new generation of luxury shoppers to show off their purchases on social media.

Part of that purpose-driven culture is one moving away from collecting items and towards collecting experiences. After all, the best Instagram posts show don’t just show a product, they show the product being enjoyed – a simple photo of a watch won’t do. From a retailer perspective, shopping experiences are even better if they are unique - meaning your London store should not just be a carbon copy of your New York store. It should have local flair.

This doesn’t mean retail stores should become tour operators. But you should strive to make your property an experience itself, from the moment a traveller enters the store to the unboxing of your product. Getting this right isn’t easy or cheap; it requires staff who are trained to understand this kind of consumer and give them the experience they want, possibly by speaking a variety of different languages. This brings us to our next point...

As I mentioned, another characteristic of the new generation of travellers is where they come from. While Chinese tourists are staying a bit closer to home, currently the huge growth of incomes in the Asia-Pacific region means an increasing proportion of travellers will come from there. Here’s how to adjust to this slow shift in source country.

Make sure you accommodate the different sizes, colours and materials that will appeal to different tastes. I remember landing in Tokyo with my luggage having been lost and discovered it was very hard to find clothing in my size because most of the local shops catered to a smaller Japanese sizes that befitted the country's average body types. 

> Read The State of London Luxury 2023, our report on high-end retail and hospitality in the capital

Ensure you can accept payments in the methods that make sense for these travellers, whether that be WeChat or with cash. Cash is often much maligned in the UK, yet statistics show international travellers carry cash as their preferred payment method for small and medium-sized purchases.

It is crucial that your staff can greet shoppers from all over the world in a way that is culturally appropriate, perhaps by being fluent or competent in several languages. 

Most luxury shoppers want the same thing: a respectful and exciting experience. You just need to work out how to offer that and train your staff how to deliver it effectively. 

> "Leading Travel and Tourism Retail" by Sacha Zackariya is available now. Walpole members are eligible for a 20% discount on the title by using the code KOGANPAGE20 at checkout when bought via koganpage.com