Insight: London beats Paris to claim Europe's top retail destination
Savill’s European Retail Destination Index, which identifies the best opportunities for expanding international brands, claims that London’s success is due to its underlying operational fundamentals related to retail spend and tourist flows. These factors have been further enhanced by London’s ‘opportunity’ potential for new retail entrants and total occupational costs, which are 6.7% cheaper than Paris.
The company has highlighted Mastercard figures which show that London has overtaken Paris with a record 19.8 million international tourists spending a total of €17.8 billion in 2015/2016. This level of spend is 53.5% above that recorded for Paris and is even more pronounced when looking at the proportion dedicated to shopping. Visitors to London tend to allocate 46.7% of their total spend to shopping according to Mastercard, compared to 16.7% in Paris.
In addition, London has received a boost to trade since the Brexit vote. As a result, London’s West End saw a 3% annual increase in retail sales in July 2016, the month immediately following the EU referendum.
Marie Hickey, director of retail research at Savills, said: “While this measure did not feed into the European Retail Destination Index, it does highlight the importance of visitor appeal in determining the attractiveness of a location to new international brands.”
When compiling the report, Savills compared the total number of standalone stores occupied by the top 10 global fashion brands or groups in European cities relative to population and visitor numbers.
London was found to offer 13.1 stores per 1 million of population and 3.9 stores per 1 million of international tourists. This compares to Paris with 17.3 and 5.9 stores respectively. As a result, Savills suggests that international brands looking to expand may find that that competition is less pronounced in London, although it will be largely dependent on the nature of their product offer and existing competition.
“The appeal of London and Paris to expanding international brands is unrivalled in Europe, however recent terror attacks have impacted Paris’s international visitor numbers, and their spending.” said Lydia Brissy, director of European research at Savills.
Hickey added: “The revenue potential of London and its lower occupational costs suggest the profit margin offered by a store there may be greater than that of a similar store in Paris. This will enhance its appeal to new international entrants, hence its place at the top of our European Retail Destination Index.”
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