The London 2012 Olympics has the potential to give fashion retailers two peak trading periods next year - but only if they start their preparations now
If fashion retailers needed a boost for what has been - at best - a tough trading climate since the recession, then next summer’s Olympic Games in London could be just the ticket. In fact, retailers could almost be sitting on two Christmases in one year.
According to tourism agencies Visit Britain and Visit London, the 2012 Olympic and Paralympic Games are forecast to generate £2.3bn in tourism spend in the UK by 2017, with London benefitting from £1.9bn of the total. Interestingly, 54% of this money is predicted to be generated after the Games, highlighting the potential the event’s legacy could have for the UK’s economy, if everything runs smoothly.
Footfall in London is expected to grow after the Games. Jace Tyrrell, director of the New West End Company, which represents 600 retailers on Bond Street, Oxford Street and Regent Street, estimates visitors to the West End will increase by between 10% and 15% in 2013. He says: “There will be a boost and an interesting change in the pattern of visitors over the next 18 months, which will lead to a very good 2013 - the area has masses to gain post the Games.”
There are plenty of opportunities before the Games even start, too. Visit London expects there to be an increase in business trips to the capital in the run-up to the Olympics, potentially bringing £321m into London and £33m throughout the rest of the UK from now until the Games.
During the 19 days of the Games, an estimated 8.1 million tickets for sporting events will be sold. Each ticket buyer is expected to take an average of four tickets. This equates to an extra two million visitors to the capital. In terms of retail, Tyrrell estimates an extra £100m in spend and an additional 1 million visitors to the West End. Although a significant cash injection, it doesn’t quite compete with Christmas, when the West End on average generates £1bn in retail sales.
Nigel Dasler, UK vice-president at international financial services company Global Blue, says: “London’s bars, hotels and restaurants will be teeming with tourists, journalists and entourages during the Olympics next summer and we can expect tourism retail spend, due to London being one of the world’s premier shopping destinations, to slightly increase versus the same period in 2011 - positive but not off the scale.”
Prepare to profit
Still, all this extra spend is nothing to be sniffed at, but retailers need to be clever - and well-prepared - to cash in on it.
According to telecoms and IT provider BT Global Services, many retailers in Vancouver gave themselves almost 18 months to prepare for the 2010 Olympic and Paralympic Winter Games. By getting the right technology in place early - from payment to security systems - retailers ensured they could handle, and profit from, the increase in visitors.
Barcelona, which hosted the Olympics in 1992, is a good example of how investment before the Games can have a huge, long-term impact. According to Visit London, Barcelona invested €10.7bn (£9.41bn) in improving telecommunications, transportation, hotels, housing, business centres, health facilities and cultural attractions between 1986 and 1992. As a result, in the eight-year period following the Games, Barcelona attracted €98.8bn (£86.9bn) of additional investment in infrastructure, and €1.9bn (£1.2bn) in urban renewal.
Getting the experience right for customers in the run-up to and during the Games will encourage visitors, especially those in emerging markets, to travel to the UK, says Amy Crees, editor of tourism information siteTourism2012Games.org.
She believes retailers can benefit from this in different ways. “One key area to focus on is providing a world-class welcome for visitors. This will be crucial in 2012 and beyond. Compared with many other nations, the UK does not rate well for its warmth of welcome,” she explains. “We have an opportunity to shift this perception and if customers have a good experience while they are here, they will return home with great stories and so begins the positive cycle of word of mouth. Well-trained staff are a sound investment that will provide benefits well beyond the Games.”
Retailers with stores in and around Westfield Stratford - the nearest shopping centre to the Olympic Park, due to open in September - must ensure they maximise the potential from additional footfall by getting the right product in stores at the right time, and engaging the best marketing initiatives.
John Burton, director of Westfield Stratford, expects 70% of Olympic spectators to travel through the shopping development en route to the Olympic Park. “London 2012 poses an unprecedented opportunity for retailers in the capital and, of course, at Westfield Stratford in particular,” says Burton. “Those who capture the Olympic momentum in store will be able to take full advantage of the huge numbers of people coming through the centre. Planning a unique stock mix will be crucial, with a potential for selling directly to spectators, Olympians, media and corporate visitors from across the globe.”
But it’s not just the major retailers in London that can benefit from the additional footfall and cash. With nearly half of all the tickets for the Games allocated to events outside London in places such as Weymouth (for sailing), Hadleigh Farm in Essex (mountain biking) and Broxbourne in Hertfordshire (canoeing), there is an opportunity for retailers in these areas to align themselves to the Olympics, thus boosting their chances to win their share of the additional spend, as well as helping to put them on the tourist map post the Games.
To make the most of the opportunity, indies in the UK should consider partnering with tourist boards, tour firms and tourist attractions. “Businesses can get in contact with the big four sports hospitality agencies (Sports World, SportsMark, iLUKA and Jet Set), which will be looking for exceptional experiences for their clients,” says Crees. “And the Authorised Ticketing Resellers - the tour operators that sell Olympic tickets overseas - may be interested to find out more about shopping experiences that can be packaged up with the tickets.”
Dasler agrees that relationships with hotels can be extremely useful to retailers. “Getting to know your local concierges will encourage them to direct tourists to your store when asked about the local area and its amenities,” he says.
And once retailers get those customers through the door, service is of utmost importance, adds Dasler, who advises retailers to think carefully about staffing. “In terms of in-store customer service, multilingual staff will become extremely useful, as speaking to, or understanding a customer in their language, will only help to create a sale.”
However retailers choose to take advantage of the Olympics in 2012, it is clear that the businesses which start planning now and implement structures accordingly will not only benefit before and during the event, but also for years to come. From product and marketing to logistics and store operations, there is a lot to do before next summer and with fewer than 500 days to go, the race is on to be the first over the finishing line.
Potential tourism spend in the UK between 2007-17
Potential tourism spend in London between 2007-17
Potential additional retail spend in London’s West End during the 19 days of the Olympic Games
Number of people expected to attend the Olympic Games
Number of tickets expected to be sold for sporting events
Sources: Visit Britain; Visit London; New West End Company, Westfield