Brexit Doesn’t Mean Exit For International Retailers in London
Latest research from global real estate advisor, Colliers International, reveals that even in the face of continued economic uncertainty and the woes of Brexit, Central London remains a prime destination for international brands and interest is still growing, as currently, over 50 per cent of stores on core shopping streets are international brands and 30 new retailers have arrived in the last year alone.
In addition, demand from Chinese shoppers shows no sign of waning with average spend up 30 per cent (YTD) to £1,663*.
Paul Souber, Head of Central London Retail at Colliers International commented: “Following the Brexit vote, sterling devalued significantly, making London more attractive to tourists; particularly those from China, the UAE, Saudi Arabia and Kuwait, who quickly began taking advantage of the ‘Brexit bargains’ on offer. Of these, Chinese tourists were the biggest contributor to international sales, accounting for 35% of tourist spend*.
“As a result of the currency-led tourist boom, many retailers noticed an escalation in shopper footfall and we initially saw a rise in the number of active requirements as a result. However, with shopping habits increasingly moving online and an uncertain UK economy slowing the rate of consumer spending, many retailers are feeling financially squeezed and are subsequently focusing more on controlling their overall occupational costs.
“The focus on the bottom line coincides with a recognition from brands that their bricks and mortar stores must be repurposed so that they seamlessly connect and enhance all parts of their retailing platform, be that online or instore.
“In practice this translates to retailers being more discerning over the number, size and location of physical stores and, in turn, these stores become more experiential and personalised.
“As consumers become more time challenged, it is essential that the locations they visit provide them with a convenience led menu of experiences, from great shopping to a huge array of dining and entertainment options, cultural experiences, health and fitness pursuits, relaxation and leisure, all easily interconnected and accessible by transport and digital infrastructure.
“London is naturally suited to meet these challenges as they are already being embraced and executed by the major landowners and stakeholders in the Capital who are curating, enhancing and future proofing the capital so that it remains the best city in the world.”
Recent international retailer activity in Central London:
- During 2017, there were eight new openings on Regent Street, seven of which were international brands, reinforcing its position as one of the leading upmarket fashion destinations in Central London. Debut brands include luxury Italian sportswear label Paul & Shark; the launch of the H&M group’s ARKET and Weekday; the first European flagship from Canada Goose and Asics’ largest store in the world.
- We are beginning to see “country brands clustering” on specific streets in the capital:
– Vibrant South Molton Street has become the go-to location for international brands to launch their UK store, such as Spanish fashion retailer T.ba, French women’s fashion IKKS and French pureplay fashion retail Sezane. These will soon be joined by the major French lingerie brand Empreinte.
– Sloane Street is dominated by the most prestigious French and Italian fashion and jewellery brands, representing two thirds of the street’s offer.
– Other diverse pitches include Albermarle Street, where a hub of Italian occupiers can be found and Bruton Street, which is home to the largest proportion of French brands, including a UK debut for luxury leather goods house Moreau Paris. Its third store opening after Paris and Tokyo, Moreau reportedly paid a premium to be located amongst the likes of Isabel Marant, Diane Von Furstenburg and Paul & Joe.
- US online fashion label, Nasty Gal, which Boohoo acquired earlier this year, opened a pop-up on Carnaby Street in November 2017. The 2,700 sq ft shop is the brand’s first bricks and mortar venture outside of the US.
- The former BHS unit of Oxford Street saw Polish fashion chain Reserved open in September 2017, with the remaining space being let to Swingers and new concept Market Hall.
Mark Charlton, Head of UK Research and Forecasting at Colliers International added: “It’s indicative of the strength of occupier demand in the Central London retail property market that shop rents rose, on average, by three per cent during 2017 – despite continued uncertainty and lower levels of consumer spending.
“The hyper rental growth of the past three years is now at an end, and the level of vacant shops has gone above two per cent for the first time since 2010 – but this is still a void rate which is the envy of most shopping environments.
“The macro challenges which have impacted all great global shopping cities will remain in 2018, but will also contribute to exciting change.
“2018 will be a milestone year for London’s shopping scene, with the opening of the Elizabeth Line and part pedestrianisation of Oxford Street, easing congestion and providing improved access to many of the capital’s shopping destinations.”