Big spenders drive West End recovery despite footfall lag
The West End of London was an area that suffered more than many others in the pandemic as office workers stayed at home, international tourists did likewise and local shoppers went online.
But the neighbourhood is recovering fast at present, updated figures from the New West End Company (NWEC) showed on Wednesday, although it still lags the pre-pandemic period.
The upbeat outlook comes despite the fact that VAT-free shopping for tourists remains a dream for retailers at present. NWEC had issued a prediction in early October saying the area would reach its historic annual turnover of £10 billion by 2025 after VAT-free shopping had been reintroduced by previous Prime Minister Liz Truss and her Chancellor Kwasi Kwarteng.
But within a few days, the infamous mini-budget had led to a change of Chancellor and a change of policy, and the shopping perk was abolished again, raising fears that the West End would continue to undershoot its target for longer.
NWEC and global property consultancy Colliers have run the number based on recent activity and still think the £10 billion figure is achievable in that time scale.
On Wednesday they said updated figures show sales up 56% compared to 2021, as spend continues to outperform footfall, with visitors spending more per visit. And tourists are returning quicker than anticipated.
NWEC, which represents 600 retail, restaurant, hotel and property owners across Bond Street, Oxford Street, Regent Street and Mayfair, said the latest data shows that turnover in the area in 2022 was £8 billion. That was a big jump on 2021, even if still 11% below 2019 levels.
What's important, though is the aforementioned fact that the parity between spending and footfall is changing with the former outpacing growth in the latter. What this means is that a new type of West End customer is emerging post-pandemic, one who’s visiting the district less frequently, but making the most of each visit by spending more in the many shops, restaurants, bars and hotels.
And that’s partly being driven by the influx of high-spending overseas visitors, outperforming the expected rate of recovery anticipated at the end of 2022. It’s 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.
But NWEC also said sales for the next two years are forecast to be lower than the predictions made in 2022 due to the challenging backdrop.
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.”
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