Following the lifting of Covid-19 restrictions, “freedom” may have arrived in the UK – but tourists have not. Indeed, it could take years for the volume of visitors, particularly those from Asia, to return to pre-pandemic levels. So how can prime cities like London adapt and innovate to win more spend from domestic consumers?
“If you look at two years ago, tourism and airports were over 30% of our business – and this last quarter, it’s a single digit percentage,” Watches of Switzerland chief executive Brian Duffy says, encapsulating the dramatic shift in spend during the pandemic.
The luxury jeweller’s trade has only recovered to 50% of 2019 levels in London, and is down a fifth in regional locations.
But Watches of Switzerland is far from the only retailer feeling the consequences of the shift to online, the growth of neighbourhood shopping locations and the absence of international consumers that the pandemic has caused.
The UK received 11.1 million inbound visits during 2020, a 73% decline from 2019 levels, according to the Office for National Statistics. Visit Britain forecasts that 11.3 million international tourists will touch down on these shores this year, just 28% of pre-pandemic traffic. Tourists are predicted to spend £6.2bn when they do arrive in the UK – a mere 22% of 2019 levels.
The Asian crisis
Most conspicuous by their absence are big-spending tourists from Asia. According to Statista, 154 million Chinese citizens travelled abroad in 2019, a number that has plummeted during the coronavirus crisis. But many of those holidaymakers are travelling domestically, instead. Some 115 million domestic consumers travelled around China during 2021’s May Day festival, bringing in RMB 47.56bn (£5.35bn) in tourism revenue – cash that the Chinese government is keen to keep hold of as the world returns to normal.
Morgan Stanley predicts that China’s private consumption will more than double to $12.7trn (£9.3trn) by 2030, buoyed by government policies to support the local economy and increase imports. According to China’s Ministry of Commerce, imports of consumer goods rose 8.2% to RMB 1.57trn (£176.5bn) last year alone.
Major brands including Burberry and Mulberry are already enjoying surging sales in the Greater China region as a result, offsetting declines in their European businesses. Chinese ecommerce giant JD.com has also registered rising sales of imported products, particularly in the health and beauty category, at a time when consumers have not been able to travel abroad.
“During the [pandemic], the government introduced a series of subsidy policies to encourage consumption and stimulate the economy,” managing director of Azoya Europe Elena Gatti explains. “They have issued consumer vouchers to citizens and achieved quite good results, including food and beverage vouchers, sports vouchers, book vouchers – consumers can enjoy discounts when spending at designated places.”
Major Western cities – and the retailers operating within them – need to adapt as a result in order to emulate China and attract higher levels of domestic spend.
Footfall down - but spending per shop is up
New West End Company marketing director Kate Thomas says that, although footfall to Oxford Street, Regent Street and Bond Street has fallen, average transaction values have risen, as consumers make more purposeful visits to stores rather than simply browsing.
“If you had looked at the entirety of Bond Street being closed, you would have thought: ‘disaster, disaster!’” Thomas says candidly. “But in actual fact, while it hasn’t been good, it hasn’t been nearly as bad as one might have thought. Luxury brands have done reasonably good business [since re-opening in April].”
Initiatives including curated collections, the introduction of appointments to visit stores and contacting loyal customers to alert them that items they want are back in stock have all strengthened retailers’ relationships with domestic consumers. Gucci, Tiffany & Co and Cartier are among those offering appointments, while Chanel is offering virtual viewings of new collections.
In Paris, department store Galeries Lafayette created a personal online luxury video shopping service for French customers offering next-day home delivery or click and collect, while lingerie brand La Perla is opening a new branch in French holiday hotspot Cannes, designed to appeal to domestic tourists.
Retailers think local over international
Retailers are also moving into new categories that better appeal to local shoppers, in a bid to offset the disappearance of international visitors perusing the shelves. Selfridges, for instance, opened garden centres in London, Manchester and Birmingham in June to woo the swathes of green-fingered Brits who are spending more money on their homes following nationwide lockdowns.
Its department store rival Harvey Nichols has launched a luxury resale outlet, aimed at boosting its sustainability credentials and making high-end products more accessible to a greater number of consumers. Although shoppers can only buy online, sellers can drop off unwanted handbags, clothing and accessories at dedicated collection points in London, Birmingham, Manchester, Edinburgh, Leeds and Bristol – a move Harvey Nichols hopes will establish a greater sense of community and loyalty among its domestic shopper base.
Across Europe, other cities formerly thronged with tourists are now making deliberate moves to connect with local shoppers to bridge the gap. In February, Paris mayor Anne Hidalgo greenlit plans to transform the city’s Champs-Élysées into a public space for pedestrians and local shoppers by 2030 – proposals that had feedback from local residents at their heart.
In Ireland, Dublin City Council is re-applying for planning permission to transform College Green in the heart of the city into a public plaza, while in Barcelona, the Consell de Cent street that runs through the centre of the city has been reduced from three lanes to one road, with an extended footpath for pedestrians. All three offer prime examples of how city centre planners and businesses can join forces to create an environment that appeals not just to tourists, but to local shoppers.
With the decline in tourist numbers unlikely to fully recover for a number of years, such approaches will prove vital if prime city centres are to win a greater share of the domestic wallet.