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Luxury tourism shopping in London

16th May 2016

With international visitors numbering 17.4 million people and visitor spend of £12.5 billion, London ranked number one as the world’s most popular tourist destination for 2014 (London and Partners, 2015). The share of shopping expenditure is significant and therefore its importance for the city economy is undisputable. Tourism industry is important for the retail sector as for many of the international visitors shopping has become the main purpose for visiting the city. Therefore, there is an interesting relation between tourism and shopping. On the one hand, shopping is a main way of gaining income from international visitors; on the other hand, it turns out as an important element that attracts tourists to the city.

The main focus in my dissertation project was on the Chinese market and its consumption of luxury brands which is constantly growing over the last decade. The research itself focuses on the motivation for purchasing luxury goods among the market and it investigates the role that luxury consumption plays in the motivation of Chinese tourists for visiting London.

The findings

The findings of the study suggested that Chinese tourists have different motivation values in luxury consumption. The research showed that there are three main categories of Chinese luxury consumers according to their motivation and perceived values and these are: the confidence seeker, the status seeker and the pleasure seeker. They seek to achieve different outcomes when consuming luxury goods and perceive the “price” factor differently. Furthermore, the rapidly- changing Chinese life- style

preferences over the last decade and their refined taste were discussed as main reasons for purchasing luxury goods in London. The demand for authentic and quality goods was also mentioned as a strong motivational factor for visiting London, while Bond Street was seen as a synonym of sophistication, wealth and quality. The price differentials in London compared to those at home and the exclusivity of items available here were discussed either as a main reason for visiting London or an excuse for doing more shopping during the stay. However, the strong gifting giving culture had a significant impact over the total spending of Chinese tourists and definitely is an important factor in the luxury shopping process.

Regarding the shopping experiences, the findings indicated that overall Chinese luxury consumers were satisfied with their shopping experience on Bond Street. The research was highly focused on the factors that affect the shopping experience of this particular luxury market. The environmental element, i.e. all tangible and intangible elements in service environment, was mentioned as significantly important for the Chinese luxury consumer. Some of the respondents described the atmosphere on Bond Street as amazing, unique and inviting, while others emphasized on the external and internal design of particular shops. However, both cases proved that environmental element had a strong influence over the shopping experience. Furthermore, the employee factor, i.e. the ability of associates to deliver high-standard customer service, was discussed as an important factor in the overall experience. Respondents used words as “impressed”, “exceptional” and “loyal customer” when describing their communication with the associates, which indicates that it was an important part of their shopping experience. Finally, the presence of other “wealth”, “sophisticated” consumers and “people with good taste” played an important role for some of the respondents.

Moreover, the research presented some interesting findings that were not pointed out by the literature but could attract the interest of marketing organizations seeking to attract the Chinese luxury shopping market. Visa regulations were mentioned as the main reason for choosing other destinations for luxury shopping such as France, Italy, Germany over the UK. Furthermore, the findings showed that the Chinese luxury consumer has higher expectations than before regarding the shopping experience in the store and requires additional extras and more flexibility. Finally, the analysis presented an interesting finding regarding Chinese luxury consumption preferences. Most of the respondents pointed out that they are not interested in purchasing expensive flights, luxury packages or accommodations. Although they tend to spend a lot on luxury goods, they have no concerns to sleep in two or three star accommodation.  

How this research could contribute to destination management practice and theory

The research project aims to fill the gaps, providing in-depth study of the motivation for luxury tourism shopping, experiences and preferences of Chinese market in London and those findings could be transferable to other European leading tourism and retail destinations.

Moreover, in practical terms, some recommendations could be given to the industry, both tourism and retail. The research showed that Chinese luxury consumers have higher expectations regarding their shopping experiences than before. Therefore, it is suggested to hire more Mandarin – speaking staff and provide more memorable customer service. This could increase the total spending of Chinese luxury consumers, make them loyal and repeat visitors and spread further the word-of-mouth. Furthermore, China Union Pay credit cards should be accepted everywhere in the UK so the Chinese tourists can be fully satisfied with their shopping experience.

On the other hand, research into the role of the luxury shopping in the travel motivation of Chinese tourists provides us with useful information which could be helpful for future tourism planning and promotion. The economic significance of the tourism shopping has been largely neglected and yet there is a strong need of cooperation between tourism and retail industry. As London is competing with other global tourism and shopping destinations such as Paris, Milan, New York, this sector needs to be further strengthen in order to resist to the harsh competition. Tourism shopping and luxury tourism shopping, in particular, should be part of the overall tourism and marketing strategy. This research project revealed different motivation values among Chinese luxury consumer. These findings could be applied into the marketing campaigns of particular luxury brands among the Chinese market. In order to reach maximum audience and engage all different types of luxury consumers, all key concepts like “ success”, “status”, “prestige” “exclusivity”, “hedonism”, “quality”, “experience” should be used in a promotional campaign. Using all key motivation values will guarantee engaging of all types of luxury consumers and lead to growth in the market share.

Lastly, it is suggested that both tourism and retail industry should actively work with the government on future changes and improvements to the current Visa Policy in the UK. As the Visa regulations are considered as one of the main obstacles for attracting more Chinese tourists, it could lead to increasing visitor number and respectively expenditure.

Luxury tourism shopping in London