MIPIM 2018: Prime retailers experience mix of currency-led tourism boost and lower rate of domestic consumer spending, says Colliers

By James Wallace - Tuesday, March 13, 2018 11:49

Prime central London retailers are experiencing Brexit fortunes: a boost from currency-led tourism from affluent shoppers and a squeeze from declining domestic consumer spending due to the UK’s uncertain economic outlook, explains Colliers.

The counter trends represent mixed fortunes for the sector. On the one hand, international retailers continue to flock to prime central London locations with 30 new retailers arriving within the last year. The strong lettings success in the prime central retail market is driven by an escalation in shopper footfall, much of which is international consumers attracted by ‘Brexit bargains’ due to sterling’s sustained devaluation.

London remains relatively more attractive to affluent tourists from China, the UAE, Saudi Arabia and Kuwait, keen to take advantage of the ‘Brexit bargains’ on offer. Of these, Chinese tourists were the biggest contributor to international sales, accounting for 35% of tourist spend, according to Colliers, which cited their average spend year to date had rocketed 30% to £1,663.

In 2017, Colliers notes that seven of the eight new lettings in Regent Street were international brands, including Paul & Shark, H&M group’s ARKET and Weekday; Canada Goose and Asics. Colliers argues these major international lettings reinforces the district’s position as one of the leading upmarket fashion destinations in Central London.

However, Paul Souber, head of central London retail at Colliers International says this optimism must be tempered with the reality of more macro threats to the high street. “Shopping habits [are] 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.”

Mark Charlton, head of UK research and forecasting at Colliers International added: “The hyper rental growth of the past three years is now at an end, and the level of vacant shops has gone above 2% 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.”

James Wallace is a freelance consultant and can be reached via WhatsApp on 07825 382670 or email: jawallace32@gmail.com

 

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