Brexit and the UK Government’s scrapping of tax-free shopping for travellers are a “drag on growth” that has made the UK the “least attractive shopping destination in Europe.” This might sound like something I have said – and it is an argument that I have made many times before.
But these words are not mine this time. These are the thoughts of Burberry Chair Gerry Murphy, who made his comments this week in a speech which made headlines in both trade and national press.
Data from Burberry shows that London has the weakest recovery following the Covid pandemic of the big European cities. This is not surprising, why would travellers come to London to shop when there is literally no price advantage to doing so. The fact they are not shopping here does not just impact retail either, it has an effect on hotels, airports and airlines too. Gerry Murphy was quite right to call the decision “perverse” and an “own goal”.
London has the weakest recovery following the Covid pandemic of the big European cities
Just days after Murphy spoke out, Heathrow’s Fraser Brown did the same. In an article for the Daily Mail, he said the “utterly misguided” government decision has led to a multi-million pound drop in luxury and beauty spend at the airport.
We, in travel retail, talk a lot about making the shopping offer as attractive as possible for travellers and I have never been quiet about the fact that I truly believe price is a vital part of this industry. But how are airports and brand supposed to deliver a price benefit and an attractive offer if they are hampered by foolish laws forced on them by a government?
The “utterly misguided” government decision has led to a multi-million pound drop in luxury and beauty spend
Airports in other major cities are, as Brown said, “rubbing their hands with glee” at the problems these rules are causing for UK retailers.
And the worst part is that this is only going to get worse.
Figures from Morgan Stanley show that China’s reopening will boost luxury spend around the world and the nation is expected to account for 60% of luxury growth by 2030. Europe remains an attractive shopping destination for these travellers; there is a price advantage compared to shopping in China and there is still a magic attached to buying luxury on the continent.
But in the UK? Not really, I fear. Not only is the price advantage gone, the wider impression of the UK market following the government’s decisions has already seen the UK fall from second to fifth as the chosen market for Chinese shoppers in Europe. This impact will only get worse.
One look at the brands on offer in both the domestic and travel retail spaces in London shows the potential. I fully believe this remains a vibrant, beautiful and exciting market, but it is currently being strangled by a government which is either unwilling or unable to fix the mistakes of its past. We can only hope they see sense before it is too late. Until they do, I will join those who continue to point out that their current course of action is wrong.