LONDON — So much for that Peking Pound.
Chinese consumers have failed to give a substantial bump to luxury goods sales in London, according to the third annual Walpole & Ledbury U.K. Luxury Benchmark Study.
While British luxury brands remain popular with the international consumer, both in the U.K. and abroad, they are failing to attract large numbers of Chinese tourists in the U.K.
“The U.K. is falling behind its European peers in attracting the Chinese shopper,” the report said. “The biggest Chinese shopping windows, such as Chinese New Year and Golden Week, have no impact on sales for 71 percent of the sector.”
The report is based on a survey of senior luxury executives in the U.K., carried out by the market research firm Ledbury in collaboration with Walpole, the not-for-profit organization that represents Britain’s luxury brands across all sectors. Brands taking part in the survey included Burberry, Mulberry, and Jimmy Choo.
Asked why Chinese tourists are relatively thin on the ground, Guy Salter, deputy chairman of Walpole said, “The visa regime in the U.K. means we get fewer shoppers than Paris or Milan. In addition, it could be that we are still in the pre-growth stage for Chinese tourism. We all know the Chinese traveler is going to become as important to luxury goods consumption as the Japanese traveler was in the Eighties, and we are likely still on a growth curve.”
The Schengen visa of the European Union allows Chinese tourists to move freely among 25 member countries, including France, Italy, Switzerland, Belgium, and Spain. To enter the U.K., however, Chinese visitors have to apply for a separate visa, which involves a lengthy application form and long processing times.
The Chinese tourist trend has not dampened British brands’ desire to expand in China, with 37 percent already present in the country and 27 percent planning to enter the market. Some 67 percent of the British brands currently eyeing China are looking into planting their flags in tier-three cities, which are defined as having a population greater than one million.
Back at home, the news is good: The U.K. luxury industry is expected to grow 8.5 percent this year, and overall, it is on target to achieve forecasts of 9.1 billion, or $14.6 billion by 2015. The report named London, Manchester and Edinburgh, Scotland the top three cities in the U.K. for luxury goods consumption.
Respondents said this year would be particularly important for sales growth, with the Diamond Jubilee and the 2012 Olympic Games driving demand. Some 58 percent of brands are expecting Queen Elizabeth’s 60th anniversary celebrations to have a “positive impact” on sales, while 20 percent say the Olympics will drive a “double-digit increase” in sales.
On the factory front, 42 percent of brands surveyed said they believe British manufacturing is so important right now that it cannot be moved offshore. Although the British textile and clothing industry has been on the wane since its Victorian heyday, a robust network of high-end specialty manufacturers remains.
Small and medium-size businesses, faced with rising labor costs in China, the price of transporting finished goods from the Far East and a desire to support homegrown industry, are increasingly turning to the U.K. manufacturing and labor force.