Global Blue: Portugal, a growing tax free shopping destination in Europe

Eysins, 2019 April 4th, On April 3rd, Jacques Stern, Global Blue President & CEO, spoke at the Luxury Shopping Talks on the current challenges the luxury segment is facing in Portugal. He presented Portugal’s Tax Free Shopping performance for 2018 and its evolution over the last 5 years, as well as the opportunities to position the country as a must-visit shopping destination in Europe.  

Portugal, like other Mediterranean countries, is the growing engine of Tax Free Shopping in Europe 

The European Tax Free Shopping market has always been dominated by France, Italy and the UK, all countries with iconic luxury brands building upon a strong heritage to attract sizeable spend per globe shopper.  

Yet, over the past 5 years, the growth of Tax Free Shopping in Europe has been driven by Mediterranean countries such as Turkey and Greece, which recorded respectively +43% and +20% tax free spend CAGR growth from 2013. Portugal, the tenth largest European Tax Free Shopping market in 2018, experienced a tax free spend CAGR growth of +12% last year.  

If we consider the traveller-mix, Portugal is different from its neighbours. Indeed, Turkey and Spain attract 14% Elite  globe shoppers, where only 6% of them shop in Portugal. Overall, thanks to a renewed retail offer helping Turkey and Spain to capture wealthy travellers, we note that the average spend per globe shopper is around €1,200 in those countries while it amounts to €848 in Portugal.   

An evolving Portuguese Tax Free Shopping landscape  

Portugal relies on Portuguese-speaking shoppers for almost 60% of its tax free spend 

In Europe, Portugal is the preferred shopping destination for worldwide Portuguesespeaking Shoppers5. Their fax free spend accounts for almost 60% of the country’s performance, against only 1% in the rest of Europe.  

Historically, Angolan shoppers used to be the country’s best performing nationality. Over the last few years however, the country has gained the interest of new nationalities, Chinese and American for example, known for their high-spending potential. Over the past 5 years, their CAGR growth has been multiplied respectively by x3.6 and x5.8 in Portugal, where Angolan has increased by x1.3.  

The luxury segment displayed the best performance in 2018 

Out of all Mediterranean countries observed, it is in Portugal that the luxury segment is the smallest with only 13% of the country’s total Sales in Store amount. However, this particular segment is showing a double-digit growth in 2018, +12% while the rest of Portugal’s retail categories are decreasing.  

Multiple not-to-be-missed opportunities to improve Portugal’s attractiveness to tourists 

Capture more Brazilian Elite shoppers’ spend  

Brazilian traffic as well as Brazilian share of wallet have the potential for increase in Portugal. 20% of Brazilians travelling to Europe record at least one Tax Free Shopping transaction in Portugal, with an average shopping wallet amounting to €15,200. A closer look at Brazilian’s segmentation shows that Portugal is capturing only 40% of Brazilian Elite share of wallet. 

To capture more of the Brazilian traffic and share of wallet, Lisbon should be positioned as a shopping destination and not only an entry point to Europe. Increasing the luxury retail offer and promoting local luxury craftsmanship would help attracting more of Portugal’s Brazilian Elite globe shoppers for example. 

Gain market share with Chinese globe shoppers  

In 2018, Chinese globe shoppers realized 1% of their European Sales in Store in Portugal. 

They account for 15% of Portuguese Tax Free Shopping performance, making them the #3 best-performing nationality. To further encourage Chinese travellers to visit and spend in Portugal, the country should first open direct air routes between China and Portugal and adapt its retail offer to Chinese consumers’ expectations (e.g. Chinese New Year or Golden Week specific celebrations and items in store).  

Developing acceptance of Chinese specific digital payment means (WeChat, Alipay) and promoting Portugal as a top tourism destination directly in China are other levers to gain market share with these travellers. 

Leverage the growing potential of Millennials 

By switching Millennials’ perception of Portugal from a destination recognized for its wine, golf and cultural sites to a trendy destination, Portugal could increase the number of Millennials visiting. Out of all Millennials travelling to Europe, 24% came to Portugal while France welcomed 31% of them.  

The potential impact of Brexit 

Every year, 2 million  British travellers visit Portugal. In 2018, their Tax Free Shopping spend was approximatively 1.6Bn€. In case of Brexit now or later, Global Blue estimates a boost of tax free spend of up to +20% and British travelers’ spend to go up +10-15%.  

Jacques Stern, Global Blue President & CEO, commented: “For the past 5 years, the growth of the Portuguese Tax Free Shopping market has been one of the strongest in Europe, with +12%. Knowing how to seduce the Millennials, adapt its offer to the Chinese globe shoppers or succeed in attracting more Brazilian Elite globe shoppers will be as many challenges as Portugal and its retail industry will have to face in order to make Portugal an essential shopping destination in Europe.” 

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