Tourists and luxury Shopper Flocking to Paris and Milan
Well, it looks like London’s luxury retailers are in a bit of a mess. Seems like those tourists and luxury shopper from the US, China, and the Gulf are flocking to Paris and Milan instead. Because they can get a good tax break on their shopping. who doesn’t love a good bargain?
But fear not, dear retailers. According to Reuters, the industry is urging Jeremy Hunt to bring back the good ol’ days of tax-free shopping for our overseas visitors. Because why bother with things like taxes and revenue when you can just focus on attracting tourists with cheap prices. It’s not like the government needs that money for anything important.
Big names in London’s retail industry are getting a bit anxious about losing their luxury status. Harrods and Harvey Nichols, property manager Cadogan, and The Lanesborough Hotel have all teamed up with hundreds of other retailers to beg for a change in the rules. How cute.
It seems that some luxury brands are getting wise to London’s lack of appeal and are investing their money in Paris instead. There, they can actually see some sales. Who wouldn’t want to spend their hard-earned money in a city where the shopping experience is actually worth the price tag? Take Panda for example, who is planning on hiring 400 employees in Italy. They even plan to open an Academy for employees.
But don’t worry, London retailers, I’m sure your begging and pleading will make all the difference. Because if there’s one thing that’s guaranteed to make people want to spend money, it’s desperation and desperation alone. So, keep on begging, keep on hoping, and who knows? Maybe one day you’ll be as desirable as Paris.
Luxury Retailers in London Falling Behind Paris and Milan
UK is missing out on some serious cash flow. According to Reuters data from Medway, international visitors contribute a whopping £28.4 billion ($34.5 billion) to the UK GDP annually. And Knightsbridge and the King’s Road being a significant part of that. But it seems that while US visitors are spending the same amount as they were in 2019 pre-pandemic. Their spending in France, Spain, and Italy has gone through the roof. Ouch.
If London’s luxury retailers want to keep up with Paris and Milan, they might have to up their game or hope for a tax break. Maybe they should consider investing in some decent customer service. Or perhaps actually lowering their prices to something more reasonable. Just a thought.
London’s luxury retailers just keep on piling up. Not only are international visitors flocking to Paris and Milan for their shopping fix. But British shoppers and luxury shoppers themselves are starting to spend more in the European Union. Because of the ability to reclaim VAT on goods, it’s no wonder that luxury brands are investing more in their French stores on the Champs Elysees than in their London outlets.
But the impact of this trend goes beyond just the retailers themselves. It could have a ripple effect on the entire tourism ecosystem. This can including hotels, restaurants, taxis, museums, and theatres. After all, if people aren’t coming to London to shop, they’re less likely to spend money on other things while they’re here. This is a very similar to the situation with the Fed constantly increasing interest rate to destroy the U.S. economy. However, here’s the UK government using taxes to destroy their economy.
London’s Luxury Shopping Loses Out to Other European Cities
The lack of tax incentives is really starting to take its toll on London’s luxury retail industry. Some retailers are even calling for the restoration of tax-free shopping for overseas visitors. It was axed after Britain left the European Union. After all, tax incentives could make a significant difference in keeping Britain competitive.
Burberry, Britain’s biggest luxury retail brand, even warned last year that London was losing out to other European cities over the VAT rule. Mulberry recently closed its Bond Street store, citing the loss of VAT-free shopping as a major reason for closing. It’s almost like London’s luxury retailers are being punished for something that’s completely out of their control. Hopefully these major companies don’t end up like Bed Bath & Beyond
London’s luxury retail industry is getting a big thumbs-down from international visitors. And it’s not hard to see why. With the axing of VAT-free shopping for overseas visitors, Britain has effectively shot itself in the foot. As Sarah Jaconelli, director of communications for the New West End Company, which represents 600 businesses, puts it, “Britain had scored a massive own goal.”
Why would anyone come to London to shop when they can get a 20 percent discount by going to Europe instead? It’s no wonder that spending by American visitors to the UK is only back to 101 percent of 2019 levels in 2022. However, France and Italy achieved over twice those levels at 256 percent and 226 percent, respectively. It’s almost like London’s luxury retailers are fighting an uphill battle, and it’s a battle that they’re not likely to win anytime soon.
Can the UK Luxury Retail Industry Regain its Appeal And Attract Luxury Shopper?
The UK’s luxury retail industry is facing an uphill battle. According to Reuters, Global Blue data, sales to Gulf state visitors in the UK were only back to 65 percent of 2019 levels. While France achieved 198 percent relative to 2019, Italy 166 percent, and Spain 158 percent.
To make matters worse, a Global Blue survey of 10,000 Chinese visitors to Europe in 2019 found that the UK was losing its appeal. While the country was the second most popular destination behind France among large European countries in 2019. The survey showed that only 42 percent of Chinese visitors were now planning to visit the UK, down from 70 percent in 2019. Spain, Italy, and Germany are now more popular destinations for Chinese visitors and luxury shopper.
The UK’s luxury retail industry needs to do something to regain its appeal among international visitors. Restoring tax incentives for overseas visitors could be a step in the right direction. Harrods Managing Director Michael Ward is warning that the impact of losing international shoppers will be felt far beyond the stores. Hotels and restaurants in London already noticing the absence of these visitors.
Cadogan, the main landlord in Chelsea and Knightsbridge, is also adding its voice to the chorus, calling on the government to act. CEO Hugh Seaborn believes that at a time when international travel should be incentivized, the UK is now at a “distinct and unnecessary disadvantage” to neighboring EU cities.
In conclusion, it’s clear that the UK’s luxury retail industry needs help to remain competitive and attract international visitors and luxury shopper back to its stores. Whether it’s through restoring tax incentives or other measures. The government and industry leaders must work together to find a solution before it’s too late.