{"id":154277,"date":"2023-03-20T23:27:21","date_gmt":"2023-03-20T23:27:21","guid":{"rendered":"https:\/\/culture.org\/?p=154277"},"modified":"2023-03-20T23:27:46","modified_gmt":"2023-03-20T23:27:46","slug":"londons-luxury-retail-struggles-vat-policy-hurts-tourism-and-shopping","status":"publish","type":"post","link":"https:\/\/culture.org\/news\/londons-luxury-retail-struggles-vat-policy-hurts-tourism-and-shopping\/","title":{"rendered":"London’s Luxury Retail Struggles: VAT Policy Hurts Tourism and Shopping"},"content":{"rendered":"

London’s luxury retailers are grappling with a significant challenge as the city falls behind rivals Paris and Milan in attracting wealthy tourists.<\/span><\/p>\n

This decline can be traced back to the UK government’s decision to scrap tax-free shopping for overseas visitors at the end of 2020.<\/span><\/p>\n \r\n \r\n \r\n \r\n

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The impact of the VAT policy is evident in the spending patterns of wealthy tourists.<\/span><\/p>\n <\/span>\r\n\r\n

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As a result, a spending boom has emerged in other European cities, with tourists from the United States, China, and the Gulf region showing a strong preference for locations where tax breaks still apply.<\/span><\/p>\n

In January alone, VAT receipts from Middle Eastern visitors to continental Europe increased by an impressive 224% compared to the same month in 2019.<\/span><\/p>\n

American spending experienced an even more dramatic rise, soaring 297% over the same period.<\/span><\/p>\n

Retailers Rally for Change: Calls to Reinstate VAT-Free Shopping<\/strong><\/h2>\n

Major London retailers are banding together, lobbying the UK government to reintroduce VAT-free shopping for visitors in an effort to boost the city’s appeal as a shopping destination.<\/span><\/p>\n

The recent reopening of China’s borders has added a sense of urgency to the issue, as Chinese tourists, who have historically been the luxury industry’s biggest spenders, are expected to start traveling again soon.<\/span><\/p>\n

Burberry, the UK’s largest luxury retail brand, has already sounded the alarm, warning that London is losing out to other European cities due to the VAT rule.<\/span><\/p>\n

Domino Effect: Local Economy and Property Market Feel the Pressure<\/strong><\/h2>\n

The continuation of the current tax policy could have far-reaching consequences on London’s tourism ecosystem, including hotels, restaurants, taxis, museums, and theaters.<\/span><\/p>\n

New Bond Street, once among the top-three most expensive retail streets globally, slipped out of the ranking in 2022.<\/span><\/p>\n

In its place, Via Montenapoleone in Milan rose to prominence, with rents now 9% above 2019 levels.<\/span><\/p>\n

Retailers argue that restoring the tax incentive is crucial for maintaining the city’s competitiveness and supporting the local economy.<\/span><\/p>\n

Warning Signs: Shifting Spending Patterns and Future Concerns<\/strong><\/h2>\n

The impact of the VAT policy is evident in the spending patterns of wealthy tourists.<\/span><\/p>\n

Burberry’s finance chief reported a 122% increase in sales to Middle Eastern travelers in its European stores compared to the same period in 2019.<\/span><\/p>\n

In contrast, sales in the UK increased only by a modest 14%.<\/span><\/p>\n

This disparity underscores the critical role that tax-free shopping plays in attracting international shoppers.<\/span><\/p>\n

A Global Blue survey of 10,000 Chinese tourists who visited Europe in 2019 revealed that only 42% planned to visit Britain in the future, down from 70% in 2019.<\/span><\/p>\n

This decline in interest is particularly concerning for London’s luxury retail industry, as Chinese tourists are known for their significant spending power.<\/span><\/p>\n

Retailers fear that the longer the tax-free shopping policy remains absent, the more London will lose its appeal as a shopping destination.<\/span><\/p>\n

As wealthy tourists continue to flock to Paris, Milan, and other European cities to take advantage of tax breaks, London’s luxury retailers are left grappling with the consequences of a policy that puts them at a competitive disadvantage.<\/span><\/p>\n

The time to act is now, they argue, before London’s status as a premier shopping destination is permanently diminished.<\/span><\/p>\n

Article In a Snapshot<\/strong><\/h3>\n
    \n
  • London’s luxury retail sector struggles as the city falls behind Paris and Milan in attracting wealthy tourists due to the UK government scrapping tax-free shopping for overseas visitors in 2020.<\/span><\/li>\n
  • Major London retailers lobby the UK government to reintroduce VAT-free shopping to boost the city’s appeal as a shopping destination, with increased urgency due to the reopening of China’s borders.<\/span><\/li>\n
  • The current tax policy has far-reaching consequences on London’s tourism ecosystem and property market, with New Bond Street losing its status as one of the top-three most expensive retail streets globally.<\/span><\/li>\n
  • The VAT policy has shifted spending patterns, with sales to Middle Eastern travelers in European stores increasing by 122%, while UK sales only increased by 14%.<\/span><\/li>\n
  • A survey of Chinese tourists reveals a decline in interest in visiting Britain, which is concerning for London’s luxury retail industry given their significant spending power.<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"

    London’s luxury retailers are grappling with a significant challenge as the city falls behind rivals Paris and Milan in attracting wealthy tourists. This decline can be traced back to the UK government’s decision to scrap tax-free shopping for overseas visitors at the end of 2020. As a result, a spending boom has emerged in other […]<\/p>\n","protected":false},"author":18,"featured_media":154278,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[3588],"tags":[],"class_list":["post-154277","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/culture.org\/wp-json\/wp\/v2\/posts\/154277"}],"collection":[{"href":"https:\/\/culture.org\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/culture.org\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/culture.org\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/culture.org\/wp-json\/wp\/v2\/comments?post=154277"}],"version-history":[{"count":0,"href":"https:\/\/culture.org\/wp-json\/wp\/v2\/posts\/154277\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/culture.org\/wp-json\/wp\/v2\/media\/154278"}],"wp:attachment":[{"href":"https:\/\/culture.org\/wp-json\/wp\/v2\/media?parent=154277"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/culture.org\/wp-json\/wp\/v2\/categories?post=154277"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/culture.org\/wp-json\/wp\/v2\/tags?post=154277"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}