London is Europe’s number one retail destination
London is Europe’s top retail location according to the latest European Retail Destination Index by estate agent Savills.
The report says London’s success is due to its underlying operational fundamentals related to retail spend and tourist flows. These factors have been further enhanced by London’s ‘opportunity’ potential for new retail entrants and total occupational costs, which are 6.7% cheaper than Paris.
According to Mastercard, London has overtaken Paris with a record 19.8 million international tourists spending a total of €17.8 billion in 2015/2016. This level of spend is 53.5% above that recorded for Paris and is even more pronounced when looking at the proportion dedicated to shopping. Visitors to London tend to allocate 46.7% of their total spend to shopping, says Mastercard, compared to 16.7% in Paris.
More recently, spending by overseas visitors in London received an added boost from the Brexit vote due to its impact on the value of the Pound. Based on a basket of luxury goods, which includes an iPad, Rolex watch and Chanel perfume, the average price for these items in London is now approximately 13% lower than those in Paris. As a result, London’s West End saw a 3.0% annual increase in retail sales in July 2016, the month immediately following the EU referendum.
- Chanel store on New Bond Street in Mayfair, London W1
- Apple store on Regent Street in London W1
- Rolex store in One Hyde Park in Knightsbridge, London SW7
Marie Hickey, director of retail research at Savills, comments: “While this measure did not feed into the European Retail Destination Index, it does highlight the importance of visitor appeal in determining the attractiveness of a location to new international brands.”
Savills has devised a relatively simple measure of retailer ‘opportunity’ for European cities. This is based on the total number of standalone stores occupied by the top 10 global fashion brands or groups (based on global turnover) in a city relative to population and visitor numbers.
London offers 13.1 stores per 1 million of population and 3.9 stores per 1 million of international tourists. This compares to Paris with 17.3 and 5.9 stores respectively. For international brands looking to expand, this would suggest that competition may be less pronounced in London, albeit this will be largely dependent on the nature of their product offer and existing competition.