The Ukraine crisis has starkly highlighted the pitfalls of international retail both abroad and at home.
The uncertainty generated by the crisis in Ukraine, and what it says about the interdependency of the world’s markets and economies, underscores how the internationalisation of British retailing creates challenges as well as opportunities.
This will most obviously manifest itself for retailers with the greatest exposure to the Russian market as the ramifications of Western sanctions take effect.
But data released this week by tax-free shopping experts Global Blue is a reminder that globalisation amounts to more than the physical expansion overseas. It is as much about the internationalisation of retail’s customers.
Global Blue reported that spending by Russian visitors to the UK fell 17% in February because of the turmoil in Ukraine and a subsequent drop in the value of the rouble.
The UK, quite rightly, takes great pride in how it leads global retailing. Its brands are at the vanguard of those creating continent-spanning footprints and its technological know-how is shaping the future of the sector.
“It is too easy to dismiss the strategic role tourism plays in the growth agenda of the sector”
In that context it is too easy to dismiss the strategic role tourism plays in the growth agenda of the industry. But the UK is one of the world’s leading tourist destinations. Research compiled by OC&C on behalf of Retail Week estimates tourists spend £3bn a year on retail - a figure expected to grow by 5% per annum, driven by increasing tourist volumes and spend per head.
The effect of these globetrotters, however, extends further. Tourist shopping destinations and their flagship stores create a halo effect that helps position UK companies as the online retailers to the world.
Despite its influence, the UK still does too little to exploit the fascination with its retail brands. And too often the UK market, whether in relation to visa requirements or the task of reclaiming VAT, comes off second-best to European competitors. Chinese tourists in particular are among the most valuable travellers in the world, but France attracts almost eight times more Chinese visitors than we do.
Yet there have been reports that efforts to improve the visa system have so far amounted to little, with business leaders condemning recent increases to visa fees.
The UK this week became the focus of the first ever Chinese government guide to investing overseas.
The interest in the UK that demonstrates, when allied to the short-term issues with Russian shoppers, should be a timely catalyst to address the ongoing concerns of the sector about how policy makers support efforts to further tap into this lucrative market.