London's West End expected to achieve £10bn turnover by 2025
As the UK marks a year since COVID-19 restrictions ended, new research has revealed that London’s West End is on track to reach historical annual turnover of £10 billion by 2025.
Despite slowed recovery due to economic uncertainty and the ongoing cost of living crisis, year-to-date sales are up 56% compared to 2021.
New West End Company, which represents 600 retail, restaurant, hotel and property owners across Bond Street, Oxford Street, Regent Street and Mayfair, initially commissioned a report from Colliers in 2022 to explore how the West End was recovering from the challenges of the pandemic.
The latest data shows that turnover in 2022 was £8 billion – a 56% increase on 2021, but still 11% below 2019 levels – as spending continues to outperform footfall. The latest data suggests a new type of West End customer is emerging post-pandemic, one that is visiting the district less frequently, but making the most of each visit by spending more in the many shops, restaurants, bars and hotels.
This is partly driven by the influx of high-spending overseas visitors, outperforming the expected rate of recovery anticipated at the end of 2022. It is expected that overall volume of international visitors will have fully recovered to pre-COVID levels by around mid 2023 to early 2024.
The three most successful trading categories in 2022 were health and beauty (+7% vs 2019), electrical goods (+4% vs 2019) and department stores (consistent with 2019). The strong performance from health and beauty demonstrates the high value that consumers are increasingly placing on wellbeing and self care.
However, this recovery has not been without its challenges. Since the last report, retail spending has been hampered by a challenging business climate due to rising inflation and the cost of living crisis impacting discretionary spending. As a result, sales for the next two years are forecast to be lower than the predictions made in 2022.
Dee Corsi, Chief Executive of New West End Company: “Whilst the next two years will be more challenging than previously forecast in the face of rising costs across the board, the West End has continued to prove its resilience in 2022 and we are still on track to hit £10 billion turnover in two years. The influx of international visitors towards the end of last year was a welcome boost, but we must be aware that they are not returning at the same rate as destinations such as Paris and Milan, largely due to the offer of tax-free shopping on the continent.”
To ensure that the West End is able to compete with its European rivals and realise its potential to thrive, NWEC is calling on the Government to build on the resilience the district has shown and implement valuable growth measures including the reintroduction of tax-free shopping in the UK, and the relaxation of Sunday trading laws in London’s two International Centres of the West End and Knightsbridge.
Corsi adds: “Welcoming back tax-free shopping and relaxing Sunday trading hours in the district would hugely amplify the value of every international visit to the West End and bring widespread benefits across the country. Today’s findings clearly show that we have an eager international audience with cash to spend waiting in the wings – we now simply have to ensure that we make the UK as attractive to them as possible.”
According to one report, restoring tax-free shopping would benefit the Treasury by £350 million a year, bringing in an additional 1.6 million visitors who would spend an extra £2.1 billion.
Despite the wider economic challenges, the district continues to see a string of exciting new entrants in 2023 including the new format Ikea at Oxford Circus, Reserved and Pandora’s new concept stores with the immersive Twist Museum and adventure themed Boom Battle Bar further enhancing the leisure offering on Oxford Street.
Inspired by the Science Museum, Swiss brand On opened its debut UK store on Regent Street earlier this month, joining Gymshark, Armani Exchange, Marc Jacobs and Aesop who all opened on the street in the second half of 2022.
Existing occupiers are also investing in their physical stores including Burberry on Bond Street, set to unveil their newly reimagined space later this year, Gucci upscaling to a new flagship store and a three storey, 7,200 square foot Rolex flagship.
Corsi adds: “The increased demand in the area is partly driven by the reduction in business rates across the capital, making the district an even more attractive place to do business, and partly due to the growth of hyperphysical retail, where brands are rejuvenating and investing in their physical stores to create entertaining, memorable shopping experience that cannot be replicated online. There is no better place to do this than the West End.”.
The opening of the Elizabeth Line is also forecast to deliver benefits for the West End over the coming 12 months, with up to 13% of all visitors coming into the West End predicted to do so via its Bond Street and Tottenham Court Road stations.