M-Commerce Takes Sales From Struggling Tourism Retail

U.S. retailers are grappling with dwindling sales, attributed to the sluggish return of international shoppers and the surge in online shopping.

Atchinson Globe reports that "the arrival of foreign tourists to the United States has only recovered 73% so far this year since pre-pandemic levels, according to the U.S. Travel Association (USTA), and many retailers that depend on foreign shoppers are struggling to make ends meet." Because of the lack of tourists, the USTA predicts that in 2023, American retailers will lose $6 billion in spending.

Before the pandemic struck, foreign visitors directed 21% of their expenditures toward U.S. retail stores, culminating in nearly $25 billion. The UTSA indicates that shopping was the primary activity for over 80% of these international visitors. Notably, Asian tourists, particularly from Japan and China, were the top spenders, contributing $2.8 billion and $2.6 billion, respectively, in 2019.

Until May 2023, strict COVID-19 restrictions hampered the inflow of foreign capital into U.S. retail. Although the restrictions were lifted in May, the anticipated retail recovery has been lethargic. This sluggishness lines up with the U.S. Travel Association's expectation for a "slow return of tourist retail spending."

However, Heidi Theis, who operates the Benvenuto Travel Design Firm travel agency, has observed an uptick in international travelers and their expenditures. This leads to a perplexing question: If travel agencies are thriving, why aren't U.S. retailers reaping similar benefits?

One plausible answer lies in the global e-commerce boom, which soared to over $5.7 trillion in 2022. Giants like Amazon dominate the online retail scene, but Chinese platforms like Taobao and Tmall overshadow them in terms of merchandise value. The convenience of shopping through smartphones, now dubbed "m-commerce" for "mobile-commerce," could be further denting physical store sales. In 2022, 70% of global retail website visits were made through smartphones.

With the proliferation of m-commerce, especially in countries like China and South Korea, Asian tourists in the U.S. might be gravitating toward window shopping rather than making actual purchases. They can easily order items online, anytime. The evolving dynamic suggests that international tourists may prioritize their travel experiences over shopping sprees in American retail stores.

Despite this, “the United States remains the preferred choice for travelers looking to shop during their vacation,” according to Travel Pulse. Their cited data concludes that “the U.S. was the largest contributor of retail tourism to gross domestic product (GDP) in 2019, totaling $34.7 billion. Despite the global pandemic, America retained the No. 1 spot in 2020 with $17.5 billion. In 2021, retail tourism contributed $23.9 billion to the country's economy.”