Mulberry chief says London's appeal for luxury tourists is fading

By

Sandra Halliday

Published
Jun 14, 2018

The gradual recovery of the pound from its post-Brexit vote low in June 2016 is in danger of denting London's thriving luxury tourist trade. That’s according to the CEO of luxury leathergoods specialist Mulberry, Thierry Andretta.

Following its latest results announcement this week, he said the company has suffered on the back of weaker tourist sales and that Mulberry chief some Asian shoppers are now switching from London to other destination cities.

London, which has always been one of the world's most popular tourist cities, became an instant magnet for luxury fashion tourists two years ago when the surprise vote to leave the EU sent the value of the pound plunging by around 20%. That made luxury goods in UK stores much cheaper for visitors from Asia, the Americas, and Europe. 

And it also made other aspects of a tourist trip cheaper with hotel and restaurant bills dropping. UK luxury stores reported booming business as a result.

But while the pound stayed weak for quite some time, it has recovered in recent months and the price differential between London and other key cities such as Paris and Milan has been eroded. Add to that efforts on the part of luxury goods firms to harmonise their prices across Europe and price rises linked to higher business property taxes, and London's pricing advantage has declined further.

“Chinese tourist groups are coming to Europe to do their shopping in London, Paris, Milan and Switzerland," Andretta said. "They will be looking at where the most attractive prices are.”

He cited figures for tourists who visited the UK to shop in the 12 months up until April 2017 rising 46%. But in the 12 months to April 2018, they fell 21%.

That said, it's clear that London is still getting larger number of tourists than it had before the post-Brexit vote surge started.

However, that hasn’t helped Mulberry. The company hasn't been one of the luxury companies to raise its prices, but its results announcement still showed weak trading in its domestic UK market.

Andretta also said that the planned closure of 31 House of Fraser stores is a concern as Mulberry sells through a number of those locations. But he thinks the closures will have a minimal financial impact.