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From Covent Garden to its teeming stock exchanges, the 2,000-year-old city of London long has been one of the world’s most frenzied marketplaces — for fashion as well as money.
In the past 10 years, financial resources flooded the city, with private equity and hedge-fund firms drawn by its relatively light regulations.
In turn, retail spending flourished: Retail sales in London in 2007 were estimated at 49 billion pounds, or $72 billion, according to the London Retail Consortium.
But the past year’s credit crisis — in which England’s banks were bailed out by the country’s government and house prices plummeted — left the city and the nation teetering on the brink of recession.
London is integral to the U.K.’s economy, providing 15 percent of the country’s jobs, and retailing is the sixth-largest contributor to the city’s economy.
But in the five weeks before Oct. 4, the city saw its first decline in retail sales in three years, when they fell 0.04 percent versus the same period last year, according to the London Retail Sales Monitor. “Customers in London were more resilient than elsewhere in the U.K., but turmoil in the city and the fastest rising unemployment in the U.K. have shaken confidence more than elsewhere,” reported Stephen Robertson, director general of the British Retail Consortium.
“London retailers are still outperforming the rest of the U.K., but with the fallout from the troubled financial sector far from over, there may be worse times to come.”
Retailers here are pressing ahead, however, readying for an upturn in consumer confidence. The falling value of the British pound, recently down against the dollar and euro, is said to be attracting more European visitors to the city. “More overseas customers are shopping in Selfridges than ever before and the numbers are boosted by visitors from the euro zone, who are taking advantage of the great value they get because of the exchange rate,” said Christine Watts, communications director at Selfridges and Co.
In late October, the 1.7 billion pound ($2.5 billion) Westfield London mall opened in Shepherd’s Bush, West London. It expects 20 million shoppers a year. The center’s enclave of luxury stores, called The Village, boasts Louis Vuitton, Prada, Dior and Burberry units.
“I think people always need a reason to buy,” said Colin Porter, commercial director at department store House of Fraser, at the launch of the chain’s 75,000-square-foot space at Westfield, which anchors The Village. “If you do something that’s new and exciting, exclusive and aspirational, people will still shop.”
And while London’s West End — the city’s main shopping area, with Oxford, Bond and Regent Streets — saw customer traffic dip 0.8 percent in October, for the weekend of Nov. 14 to 16, traffic rose 11.6 percent against the same period last year.
Jace Tyrrell, head of communications for the New West End Co., which represents retailers in the area, believes international brands will always be drawn to the West End, whatever the economic conditions. “[Retailers] have to make a statement about their brand here,” said Tyrrell. “We have 200 million visitors a year — retailers open their biggest stores with unique product here, they see them as a showpiece.”
Banana Republic and Abercrombie & Fitch Co. opened vast stores on Regent Street and Savile Row over the past two years, and Tyrrell said Anthropologie and Hollister Co. were scouting London for locations. National Geographic just opened a flagship on Regent Street, Italian jeweler Pomellato opened on Brook Street, and Ferrari will open on Regent Street selling accessories and clothing.
And as the euro has gained strength against the pound, European visitors have flocked to London for luxury goods at competitive prices. Aside from designer and better-grade stores, Tyrrell said London’s galleries, museums, theaters, restaurants and heritage are also a powerful draw for visitors.
“We have the whole package,” said Tyrrell, who noted many retailers may open for the 2012 Olympics.
The city’s edgy fashion scene also draws buyers and brands on the hunt for emerging trends, and students attending art and fashion colleges like Central Saint Martins, the Royal College of Art and London College of Fashion.
According to the British Fashion Council, London Fashion Week is worth 20 million pounds, or $29.9 million, to the city’s economy, generating 100 million pounds, or $149 million, worth of orders for British designers.
“London Fashion Week attracts media and buyers from across the world, from established and emerging markets, to find the next trends and the latest emerging design talent,” said Hilary Riva, chief executive of the BFC. “London is one of the most culturally diverse capitals. It has a thriving fashion, music and arts scene, and inspires designers to push the boundaries to become some of the most exciting fashion designers in the global fashion industry.”
Next Feb. 20 to 24, London Fashion Week marks its 25th anniversary, and the BFC will introduce initiatives supporting London designers and stress the importance of fashion to the city and British economy. The BFC in September established a fund to back emerging London designers, modeled on a Council of Fashion Designers of America program, and recipients will be announced next November. “This will allow us to make a real difference to existing businesses, helping them to grow and develop here,” said Harold Tillman, chairman of the BFC.
The city has a hard time keeping designers showing at London Fashion Week, with Saint Martins alums Stella McCartney, John Galliano, Alexander McQueen, Sophia Kokosalaki and Matthew Williamson now presenting in Paris or New York.
To further cement their presence on the fashion calendar, the BFC negotiated with Paris, New York and Milan fashion weeks to secure London a five- day slot between New York and Milan ready-to-wear collections.
London’s spring 2009 shows will now run Sept. 20 to 24. “We all agree it is very important to preserve London Fashion Week. It provides the pool of talent we all benefit from,” noted Diane von Furstenberg, CFDA president.
“We are all united by one aim and one global industry,” said Tillman.