Tourists flock to London… but they’re not shopping – report

First, the good news. Tourists are back in London. And the bad news? They’re not generally there to shop with the withdrawal of the VAT-free perk post-Brexit directly affecting their behaviour.

That’s according to Prosegur ChangeGroup, one of the world’s largest currency exchange firms, which found that the “vast majority” of London tourists are no longer focused on shopping.

It added that “these results underline the massive impact the lack of VAT refunds is having on London’s luxury retail sector. Without some change many of these storied institutions will soon shut down”.

So what are the exact numbers? The report said that as many as 89% of tourists visiting London aren’t there to shop. Under 10% go to London to pick up clothing, luxury accessories, and watches.

It’s based on the firm’s survey of 1,700 overseas visitors to London. Of those surveyed, just 11% said their trip “involved shopping”, with 6% intending to buy non-luxury clothing, 2% luxury clothing, 1% jewellery, 1% luxury accessories, and 1% watches. 

The research conducted by Oxford Economics for the firm suggested the lack of VAT refunds was putting off two million visitors a year and costing the UK economy £11.1 billion.

The bigger surprise is that the research was carried out in or around traditional luxury shopping hotspots such as Harrods and Bond Street where it might have been expected that there would be a disproportionately large number of tourist shoppers, with the company saying “this is a startling result”.

And while the survey was London-specific, it’s likely that the attitude is the same (or worse) for those visiting other key shopping cities around the UK.

The company’s CEO Sacha Zackariya went as far to predict “that many department stores will not survive until 2030 if the tourist tax remains in place”.

He added that that while “London still draws tourists with its rich cultural heritage and fantastic historic sites” the shoppers are thin on the ground. 

“There are tens of thousands of people who travel to shop — both ordinary people and high net worth individuals, yet they are clearly abandoning London as a destination,” he explained.

“When duty free shopping was a thing in the UK, we would see thousands of tourists a day exchanging pounds specifically to spend on a watch, coat, or bag. Now those same goods are selling in Paris or Milan at a better price, thanks to the EU’s VAT refund. If we want London’s shopping heritage to survive, this tourist tax needs to be wiped away by whoever wins the general election.”

The research also found that the average London visitor transaction value was £114, with those from the Middle East purchasing more pounds on average, and those from the EU purchasing the least.

Zackariya went on to explain: “The sad fact is that this doesn’t just affect London, but it destroys design and manufacturing jobs across the UK. There are thousands of small and medium sized companies around the country who create outstanding artisanal products, that tourists used to purchase when visiting retailers. Many are now hit due to Brexit-related export restrictions to the continent, as well as the inability to be price competitive for tourists visiting the UK.”