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LONDON — The organization and atmosphere of the London Olympics may have received a gold medal, but the retail performance earned at best a bronze.
This story first appeared in the August 14, 2012 issue of WWD. Subscribe Today.
Having gotten off to a worrisomely slack start, retail in central London started to pick up speed during the second week of the Summer Games, as traffic-shy locals returned to the center of town and visitors began splashing out on souvenirs.
Although official footfall numbers won’t be reported until early next month, retailers and trade organizations began breathing a little easier last week following fears the Games would be a bust for business.
“Sales were more solid in the second week compared with the first, and footfall was up in double digits compared with last year. Athletes and people generally chose to shop later, and anything with a London 2012 logo was flying off the shelves,” said Jace Tyrrell, a spokesman for the New West End Co., which promotes businesses around Oxford Circus and Bond and Regent Streets.
“We had a late start, but it came good in the end. Corporate and VIP guests helped with higher-end spending, and we saw a trend for gifting among the Chinese and Southeast Asian visitors.”
Tyrrell added that retailers are now looking forward to Eid al-Fitr, the Muslim holiday that marks the end of Ramadan and is usually a time of celebration and gift-giving. The holiday begins on Aug. 19.
Richard Dodd of the British Retail Consortium, a trade association, said there was a clear pickup in shopper numbers and sales as the Olympics progressed, although its August data won’t be published until Sept. 4.
“We’ve seen an increase in sales of food, drink and souvenir items across the U.K. Food and drink is the part of retailing where the Olympics has had the greatest effect,” he said, adding that luxury-goods sales had also seen an uptick from increased spending by overseas visitors.
Experian FootFall, which provides analytical and marketing information, saw shopper traffic increase by more than 13 percent in West London on Aug. 7. “Most notable here is the impact of Tuesday’s [Olympic] triathlon event, which took place in and around West London’s Hyde Park,” the company said. “Footfall outside of the Olympic Park was clearly diverted to the event, where spectators didn’t require a ticket…and subsequently dispersed into nearby shops.”
At Liberty, which is located off Regent Street, sales began to pick up last Wednesday, midway through the second week. “Business was really, really healthy, with our regular customers coming back and tourists visiting,” said Ed Burstell, the store’s managing director.
“Everything with the Union Jack on it, and limited-edition items sold well,” Burstell added, pointing to scarves with prints from the Liberty archives and Barbour jackets with Liberty lining. “It all washed out fine — and now everyone is talking about getting ready for the Paralympics. There will be fewer international visitors, so we’re expecting to sell more British items to British tourists.”
The Paralympics run from Aug. 29 to Sept. 9.
Retail began with a whimper during the first week of the Games, following a barrage of messages from the London mayor’s office and Transport for London that warned locals that Olympics-related traffic would be heavy, and to plan their journeys accordingly or simply work from home.
With an estimated 1.5 million people working from home during the first week of the Games, central London retailers saw their footfall and sales plummet. As a result, Prime Minister David Cameron, the London Mayor’s office, Transport for London and the New West End Co. urged Londoners to return to the city center.
While the second week saw business improve, it remains unclear how much of a boost the Olympics will give London and the U.K. over the coming months and years.
“The Olympics were never going to make or break retail. There are other, more significant factors at work,” said Dodd of the British Retail Consortium, referring to the ever-cautious British consumer and the shrinking U.K. economy. “The Olympics were useful and added a much-needed boost to retail.”
Last month, Goldman Sachs issued a report, “The Olympics and Economics 2012,” which estimated that the additional expenditure in the U.K. would boost third-quarter gross domestic product by 1.2 percent to 1.6 percent, compared with the second quarter. However, it also pointed out that any short-term benefit would be largely reversed in the fourth quarter.
The Goldman report added that, overall, hosting the Olympics plays an important role in promoting a city internationally. “Given that London is already a high-profile city for tourism and investment, the incremental benefit from this promotion may be more limited [than Beijing and Barcelona],” the report said.
The British prime minister, however, is hopeful about a halo effect. In an article published in the Sunday Times of London, Cameron said: “Over a decade we can use the Olympics to bring home business worth 13 billion [pounds],” or $20.4 billion at current exchange. “That’s more than the cost of the Games.” He was referring more specifically to winning business and jobs for Britain in relation to contracts for the 2014 Winter Games in Russia and the 2016 Summer Games in Brazil.
According to a report from Visa, an Olympic sponsor for 25 years, the Games will bring a 5.1 billion pound, or $8 billion, economic stimulus to Britain between now and 2015.