Mark Henderson, chairman of Savile Row tailor Gieves & Hawkes and London Luxury Quarter, which represents high-end retailers in Mayfair, St James’s and Piccadilly, sees opportunities for the luxury sector following the weakened pound post-Brexit vote.
Following the European Union referendum in June, we watched the value of sterling plunge to a 31-year low against the US dollar. Since then, although the negative impact of Brexit on the pound has started to emerge domestically, retailers – particularly those in the luxury sector – are experiencing a reactive boost in sales.
Over the past week we have read about Burberry’s sales picking up in the second quarter alongside reports that the UK is now the cheapest place on earth to purchase a Louis Vuitton handbag. Undoubtedly since 24 June there has been an increase in inbound tourists from beyond Europe seeking to capitalise on the favourable exchange rate, and our luxury industry has played a significant role in prompting this influx.
The UK has always been a key destination on the itineraries of travellers’ from outside the EU looking to purchase high-end fashion, but Britain is now more desirable than ever thanks to the weakened pound. Shoppers from Asia, the Middle East and the US are making the most of these discounts and increasing their spend in areas such as the London Luxury Quarter – which encompasses Mayfair, Piccadilly and St James’s.
We, as retailers, have a unique opportunity to capture this inbound market and reinvigorate our British luxury offering so it remains strong beyond Brexit. To do so, luxury retailers need to consistently improve their international offering and remain dedicated to catering to visitors’ needs.
“We have a unique opportunity to capture this inbound market and reinvigorate our British luxury offering so it remains strong beyond Brexit.”
At Gieves & Hawkes’ flagship at 1 Savile Row we engage with our Asian shoppers, a significant market for us, by employing assistants fluent in Cantonese and Mandarin to ensure we provide the highest level of service and a British luxury experience that will keep our international customers coming back.
The London Luxury Quarter has also collaborated with members to create a service called By Appointment, which caters to the needs of sophisticated international clients visiting the area, through bespoke, curated experiences and exclusive privileges.
Aside from the uplift in tourist spend, the plunge in sterling may also prove a boon to those British luxury retailers who still produce in Britain – whether it is the bespoke tailors on Savile Row, the eclectic mix of British “makers” offered by agency The New Craftsmen or brands such as Burberry, with its iconic trench coat, and Private White VC. However, as the threat of higher import costs looms, many luxury retailers face a difficult decision: absorb the increases or pass them on to their customers.
With that in mind, we must be aware that despite the short-term benefits of Brexit, our industry is at the hands of the negotiations of the British government with our trade partners. As a collective, we need to be realistic about Brexit’s future impact and work together to ensure British luxury remains a priority for the UK as a key economic driver.
The post-referendum UK luxury market by numbers
- July was the UK’s biggest-ever month for tourist visits after the slump in sterling lured 3.8 million people who spent £2.5bn, up 4% on 2015.
- Post-Brexit, tax-free shopping network Global Blue reported a 7% year-on-year increase in UK international spend for July. This rose to 37% in August and the trend continued in September, when spending rose 29% year on year.
- International tax-free tourist spending in the London Luxury Quarter soared in July (up 16% year on year), August (36%) and September (18%).