London has topped the global ranking for new luxury retail store openings in 2016.
According to Savills’ Global Luxury Retail report, more luxury stores opened in London than in any other city last year – a total of 41 new openings – compared to Paris’ 36 and New York’s 31.
London has consistently been the most visited city in the world by international tourists, says Savills, making it an important luxury retail market as approximately a third of this type of spend takes place abroad.
For European luxury brands, London is a useful stepping stone prior to expanding into the US, while for US brands it provides a gateway to Europe both geographically and in terms of brand profile.
Looking ahead, forecasts by the World Tourism Organization (UNWTO) suggest international tourist arrivals globally will double to almost 1.8 billion by 2030, aided by further growth of low cost air travel and a rapidly expanding and mobile middle class from emerging economies.
A significant proportion of luxury goods are now purchased outside a shopper’s home market, particularly those of Chinese consumers, reinforcing the importance of destination cities.
Europe will remain the largest tourist market with a projected market share of 41% by 2030 and its gateway cities, such as London, will be key target destinations for the increased tourist flow.
Destinations favoured by Chinese nationals, who acquire circa 40% of their luxury goods abroad, are highly attractive for luxury retailers.
London’s appeal for luxury brands has therefore been enhanced by its rising popularity among Chinese travellers, with visitor numbers increasing 69% in 2015, according to the Office of National Statistics.
The recent weakening in the pound, which has provided an immediate discount for many overseas shoppers, has given luxury spend in London a further boost, says Savills.
Marie Hickey, commercial research director at Savills, commented: “A significant proportion of luxury goods are now purchased outside a shopper’s home market, particularly those of Chinese consumers, reinforcing the importance of destination cities. This was apparent in 2016, when all of the key established global retail destinations saw more than 20 luxury brand store openings.”
Anthony Selwyn, head of Central London retail at Savills, added: “The role of a specific destination in brand building and enhancing the customer experience remains key, and the heritage of London and Paris saw these cities rank first and second for new luxury openings last year. With international travel expected to double by 2030, appetite among luxury retailers to expand in key markets will remain strong, though we expect to see several of the emerging luxury markets gain more market share.”