Mulberry waves goodbye to Bond Street store as tourist downturn bites
Luxury leather goods brand Mulberry has become the strongest advertisement yet for the damaging impact of the abolition of VAT-free shopping for tourists visiting the UK.
The company has closed the doors of its long-standing flagship store on Bond Street for the last time as it reels from the slow return of tourist shopping post-pandemic.
Although footfall data – and reports from retailers such as Primark – have recently suggested that city centre shopping is on a recovery trajectory, it's undeniable that the hoped-for influx of high-spending luxury shopping tourists hasn't yet happened.
Thierry Andretta, CEO of Mulberry, had warned back in November that London retail was suffering from the lack of tourist spend.
And leaving Bond Street – one of the world’s premier shopping, thoroughfares (and one of the most expensive as far as rents are concerned) – is a graphic illustration of the impact this is having.
The company still has a major store on Regent Street, not far from Bond Street, and has also opened one in the new Battersea Power Station mall. But while both of these locations target tourists, they’re also popular with local shoppers compared to the heavy tourist focus of Bond street.
Mulberry operates 55 shops across the UK altogether (six of them in the London area), and said that staff from the Bond Street shop will move to other branches with no redundancies.
It said: “The lack of VAT-free shopping in the UK has been particularly felt on Bond Street, which has always been an iconic shopping destination for tourists. The decline in visitors has impacted footfall and sales.”
But it also blamed high business rates and rents for making he location “commercially unviable”, although it did say that it hopes to open another Bond Street store in the future.
At the same time as the UK left the EU, the UK government abolished the perk whereby non-EU tourists could claim back the 20% VAT on products they bought in Britain.
Retailers had previously been hoping that the tax-free incentive might be expanded and offered to EU shoppers too, which would have given Britain a huge advantage, as it would have been the only major European destination to offer such a perk.
Instead, the cash-strapped government abolished it for other tourists in the hope that this would boost its coffers. However, more than one study has come out saying that Britain will lose out overall. And anecdotal evidence suggests shoppers who would have spent heavily in the UK are going to other cities in Europe, instead of London, Edinburgh and other key city-centre shopping destinations.
Last year, the short-lived administration of Liz Truss had planned to bring back the perk as part of its low-tax growth agenda. But after the market meltdown caused by the notorious mini-budget, the new Chancellor of the Exchequer re-abolished tax-free shopping for tourists. And despite on-going pressure from retailers, business groups, the Mayor of London, MPs and others, he's showing no sign of changing his mind.
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