West End retailers are anticipating a very merry Christmas to add sparkle to an otherwise challenging year. Till receipts for the Christmas trading period, which kickstarts this Sunday when the Christmas lights are switched on across the West End – are forecast to rise 1.6 per cent year-on-year to £2.34 billion, a new report finds.
The figures from New West End Company’s annual Christmas tracker report predict average takings of £51.1 million per day or a whopping £5.1 million spend per hour during the peak Christmas period.
International spend will bring tidings of great joy as tourists continue to flock to London’s retail heartland to make the most of the weakened pound post-Brexit. Jewellery sales in the West End celebrated a 20 per cent increase from August 2015, whilst luxury goods sales were up 35 per cent year-on-year in September.
Led by Chinese, Saudi and American visitors, the average spend-per-tourist reached highs of £1,155 in September according to Global Blue.
Despite the welcome boost this is providing for luxury retailers and department stores, domestic consumers will be more reluctant to fill their stockings following a tumultuous year of uncertainty.
High street retailers suffered from a frosty start to the year with nervousness pre-referendum, and consumer confidence decreased by 12 per cent in July – the sharpest month-by-month drop for over 26 years – as UK shoppers struggled to come to terms with the momentous Brexit decision.
This is expected to steady somewhat as the festive season looms – traditionally heralding a 30 per cent increase in footfall and 65 per cent higher spend per person in comparison to the rest of the year.
Record low interest rates and an increase in ‘staycations’ due to the weak pound will further encourage increased domestic spending.
However, overall footfall in the West End is predicted to decrease by 3.1 per cent year-on-year due to changing consumer trends as shoppers engage in multi-channel purchasing, reducing their number of trips to the high street but increasing transactions per visit. High street fashion chains will feel this most keenly due to a decrease in demand for clothing which has seen in-store fashion sales falling for the past four months.
A stimulus to the economy
A strong Christmas will enable the West End to continue to provide much-needed stimulus to the UK economy in light of Brexit uncertainty, and is forecast to contribute £5.4 billion in Gross Value Added (GVA) over the season.
However, when the decorations come down, the outlook does not look so merry. Business rate increases of up to 80 per cent next year and transitional relief measures set at 45 per cent will cost West End businesses £125 million a year, and lead to reduced re-investment into stores and jobs elsewhere in the country.
Jace Tyrrell, chief executive at New West End Company, is looking forward to the buoyant festive season to lift the domestic spending confidence.
He says, ‘Christmas is a magical time of year in the West End and there are a number of exciting attractions tipped to make this one of our best years yet.
‘However the New Year will bring in numerous challenges for our retail heartland and we will need full support from the Government on critical issues such as business rates to ensure we can continue to strengthen the UK economy as Article 50 is triggered, and we enter two years of uncertainty as negotiations to leave the EU begin.’