The loss of American tourists forces European luxury brands to think local

Each summer, come July and August, outbound Parisians, Milanese and Florentines tend to flock to their respective coasts for some weeks of respite from the urban heat, while visiting Americans linger in their empty cities, take in the cultural reverence and most of all, they shop.

In 2018, nearly 18 million Americans visited EU countries with more than one-third of the annual volume visiting during the peak summer season, according to data from the U.S. National Travel and Tourism Office. A European travel ban imposed on American visitors has stifled summer migration and halted their spending dead in its tracks.

A summer in Europe sans American tourists is more than bad news for luxury brands, who rely on American’s wallets almost as much as on the Chinese. With high net worth Americans spending 180,000 euros while abroad every year, their absence is an enormous loss of income for luxury retailers in an already challenging retail landscape.

According to Vogue Business, “two-thirds of luxury sales in Europe are driven by tourists starting with the Chinese and often followed by the Americans, at least when the dollar is strong, as it was in 2019.”

A drop in visitors has inspired new ways to reach locals

Around the world, visitor numbers have collapsed since mid-February, reducing in-store footfall, meaning luxury brands have had to innovate new forms of clienteling, reaching local customers and would-be visitors. The crux lies in securing domestic sales without the heavy reliance on tourists, and reaching the tourists in their home markets.

Agile brands have pivoted their focus and marketing budgets on e-commerce and creating a wider digital presence, but it hasn’t curbed the losses of empty shopping districts, expensive leases and shuttered stores back home. It remains to be seen how long it will take for Europe’s bustling fashion cities to rebound to pre-Covid levels.

In the UK, 5bn pounds of annual turnover is direct income from international tourism. The New West End Company, which represents 600 businesses across Oxford Street, Bond Street, Regent Street and Mayfair, warns that the area is at risk of losing up to half of its 10bn pounds annual sales this year.

Realistically, the remainder of 2020 will see a continued loss of tourist trade across Europe’s retail meccas. Planning for the season and months ahead, is crucial.

Image courtesy New West End Company