LONDON — Central London retailers have had a trying year. First, there were the terrorist attacks on the city’s transport system in July. And a hefty traffic congestion charge, escalating commercial rents and a continuing decline in tourism are expected to extend through the holiday season and consequently dent sales and profits. But retailers are banding together to shore up business — before it’s too late.
Stores on Oxford, Bond and Regent Streets have created The New West End Co. and have set up a fund to attract more shoppers to the area. Over the next three years, the group expects to raise about $32 million through Crown Estates, which owns property on Regent Street; the Greater London Authority, which is headed by London Mayor Ken Livingstone, and retailers’ independent efforts.
The money will be used to renovate rundown buildings like the ones on Regent Street with historic facades and redevelop the east end of Oxford Street. New West End Co. has also organized one-off initiatives, such as the Celebrate Oxford Street festival, held for the first time in October. For one Saturday, the street was closed to traffic, pop bands performed and rival executives Stuart Rose, chief executive officer of Marks & Spencer, and Philip Green, owner of the Arcadia Co., Topshop’s parent company, stood side by side in a show of commitment to the area. While the street festival may not have dramatically increased foot traffic, Jace Tyrrell, marketing manager for the New West End Co., was upbeat about the company’s long-term objectives.
“We are creating a unique selling point for the West End, a reason for consumers to visit the area,” she said. “With the July 7 bombings, the West End was hit a bit harder than the rest of the U.K. But the fact that half a million people turned up to the Celebrate Oxford Street event shows how resilient London is. We have dealt with terrorism for years with the IRA [Irish Republican Army] threat.”
But this new round of attacks — and other factors — have clearly taken their toll. The congestion charge, a mandatory fee set up in 2003 in a bid to ease central London traffic during weekday hours, has been increased to $14 for every car that enters the West End (and that’s before one parks).
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Foot traffic in central London immediately dropped by 17 percent the week after the July bombings and was still down 10.7 percent last month in a year-to-year comparison. This month, however, figures have shown a slight increase of 0.7 percent for the middle week of November compared with the same period last year.
In addition, U.S. tourists continue to stay away because of the weak dollar and threat of more attacks. As the crucial holiday season approaches, a survey by Westminster Council, conducted in September, has shown that 25 percent of Londoners remain nervous about traveling to the West End for leisure activities, and most of those wary Londoners are women under 35 — retailers’ key shoppers.
“Shopper numbers in the West End had been declining over a period of time,” said Tim Denison, director of knowledge management at retail analyst SPSL, a company that tracks shopper numbers and trends in the U.K. “One of the factors that’s important is that the West End has lost its uniqueness. We have flagships such as Selfridges now in other parts of the U.K., in Manchester and Birmingham, so the area isn’t such a powerful magnet for U.K. shoppers.”
Denison added that during the holiday selling season, those who fear further attacks perceive the risk to be greater. “There is an underlying edge in the West End in the run up to Christmas,” said Denison.
Rising rents have already driven away West End stalwarts Laura Ashley and Dickins & Jones, an old-fashioned type of department store. Both companies said last summer that they had been forced to close their stores on Regent Street due to prohibitive rents. Faced with its first rent review in 42 years, Dickins & Jones’ annual rent jumped from about $444,500 to approximately $8 million. The space that Dickins & Jones will leave in January is to be developed into a mix of retail, residential and office space. Laura Ashley’s space has been leased to Mamas and Papas, a store that carries maternity wear, children’s clothing, baby strollers and nursery furniture.
George Wallace, chief executive officer of Management Horizons Europe, a London-based retail consultancy, said there is a future for the area. “It would be wrong to say the West End is dead or dying,” said Wallace, adding that, given the subdued retail climate in the U.K. in general, foot traffic in the West End is relatively robust.
“The West End is a challenging location, but there is still a huge volume of domestic and visitor traffic to the area,” he said. “The increase in Chinese and Russian tourists will compensate for the decline in U.S. visitors.” Wallace said the reason some U.K. retailers, such as Dickins & Jones, have been feeling the pinch is the increased competition from the big branded chains.
“Five or six years ago we didn’t have the likes of Zara and Mango,” said Wallace, referring to the two Spanish mass retailers that have flagships on Regent Street. “It’s very expensive to operate in the most prime locations now, and smaller retailers have to have a strong trading formula and be high productivity generators to survive in the area.”
Wallace cited Selfridges, Liberty and Debenhams as stores that have revitalized their formats to keep up with the competition. Thanks to Vittorio Radice (former ceo of Selfridges, now ceo of the Italian department store chain La Rinascente), Selfridges has become an ultramodern shopping experience and destination for tourists, he said. While Liberty has distinguished itself by trumpeting its heritage and stocking niche designer brands, Debenhams has focused on offering affordable products and creating prestige by lining up such designers as Matthew Williamson and FrostFrench for its private label lines.
Annie Walker, ceo of the Regent Street Association, an organization for local retailers, is also positive about the changes ahead.
“It’s an exciting time for the West End,” she said. “Brands now want to have more space and greater control, which a flagship space can give them. We now have flagships for Ted Baker and Coast, as well as the European flagship for Apple on Regent Street.”