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Is London no longer a top luxury shopping destination?

London Oxford Street
Image: London Oxford Street. Credit: BBA Photography/Shutterstock

Tourists from America and Asia can now get a new Louis Vuitton bag for a much better deal in Paris or Milan than they can in London. As a result, both the British capital and its home-grown luxury brands are suffering.

At the end of 2022, the U.K. Government decided to scrap tax-free shopping for visitors and tourists, claiming that the country could no longer afford it. Out of all the big European cities, London is now the only one where visitors won’t be able to enjoy the 20% Value Added Tax (VAT) return on luxury goods.

Experts believe London is now losing out on major spending from well-off American, Asian, and Middle Eastern travelers. Since last summer, major cities in Europe such as Paris and Milan have benefited greatly. VAT reports from January show Middle Eastern tourists visiting Europe, were up by more than 200% compared to 2019. Spending from American tourists was even greater, with the data showing a nearly 300% increase over the same period. Pound-for-pound, tourists from the United States paid more for luxury goods than any other nation in every month of 2022.

Reports have also indicated that British tourists are now spending more on tax-free goods in other European Union countries.

Luxury retailers based in London are now calling on British government officials to bring back duty-free shopping for incoming tourists. With China reopening its borders recently, the issue might quickly go from bad to worse. Historically, Chinese tourists are big spenders in the luxury brand industry and are among the largest group of annual visitors to the U.K.

Brands like Gucci and Louis Vuitton aren’t concerned with the new tax rules, as they can easily regain any lost sales in London from any of their other flagship stores across Europe. The change in purchasing patterns has already begun to take effect. British-based Burberry revealed recently that sales to Middle Eastern tourists last quarter were up by over 120% in European stores. Compare this to the U.K. figure from the same period, which is only up by 14%. London-based handbag brand Mulberry has also come out with similar reports. They stated that before the tax rules change, roughly 50% of its sales came from overseas tourists, but now this figure has dropped dramatically to less than 5%.

If this trend continues, it could just be a matter of time before the British highstreets also start to suffer. Tourists will no doubt still continue to travel to the U.K. and London to see the sights and take in the culture, but unless something changes soon, they might start to consider doing the majority of their shopping somewhere else.

London Oxford Street
Image: London Oxford Street. Credit: BBA Photography/Shutterstock

Tourists from America and Asia can now get a new Louis Vuitton bag for a much better deal in Paris or Milan than they can in London. As a result, both the British capital and its home-grown luxury brands are suffering.

At the end of 2022, the U.K. Government decided to scrap tax-free shopping for visitors and tourists, claiming that the country could no longer afford it. Out of all the big European cities, London is now the only one where visitors won’t be able to enjoy the 20% Value Added Tax (VAT) return on luxury goods.

Experts believe London is now losing out on major spending from well-off American, Asian, and Middle Eastern travelers. Since last summer, major cities in Europe such as Paris and Milan have benefited greatly. VAT reports from January show Middle Eastern tourists visiting Europe, were up by more than 200% compared to 2019. Spending from American tourists was even greater, with the data showing a nearly 300% increase over the same period. Pound-for-pound, tourists from the United States paid more for luxury goods than any other nation in every month of 2022.

Reports have also indicated that British tourists are now spending more on tax-free goods in other European Union countries.

Luxury retailers based in London are now calling on British government officials to bring back duty-free shopping for incoming tourists. With China reopening its borders recently, the issue might quickly go from bad to worse. Historically, Chinese tourists are big spenders in the luxury brand industry and are among the largest group of annual visitors to the U.K.

Brands like Gucci and Louis Vuitton aren’t concerned with the new tax rules, as they can easily regain any lost sales in London from any of their other flagship stores across Europe. The change in purchasing patterns has already begun to take effect. British-based Burberry revealed recently that sales to Middle Eastern tourists last quarter were up by over 120% in European stores. Compare this to the U.K. figure from the same period, which is only up by 14%. London-based handbag brand Mulberry has also come out with similar reports. They stated that before the tax rules change, roughly 50% of its sales came from overseas tourists, but now this figure has dropped dramatically to less than 5%.

If this trend continues, it could just be a matter of time before the British highstreets also start to suffer. Tourists will no doubt still continue to travel to the U.K. and London to see the sights and take in the culture, but unless something changes soon, they might start to consider doing the majority of their shopping somewhere else.

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