London and Paris were top cities for luxury store openings in 2016
The Brexit vote may have given an instant boost to London stores as the pound’s value fell last June, but luxury brands clearly saw London as key even before that, a new report shows.
London topped the global ranking for new luxury retail store openings in 2016, according to Savills Global Luxury Retail report. The city saw a total of 41 new luxury openings during the year and 15 London debuts for the particular brands.
But despite London’s allure, Paris with 36 openings is still key to global brands, even though dented tourist numbers due to terrorist attacks has hit its luxury trade. Meanwhile New York is the leading US destination with 31 openings. Interestingly, Dubai is joint fourth with New York. Next come Hong Kong on 25 openings and Milan on 24.
London has consistently been the most visited city in the world by international tourists, said Savills, and that made it key for luxury brands as around one-third of all luxury spending typically takes place outside of brands’ domestic markets.
London has extra appeal due to its status as a “gateway” city. It is seen as a stepping stone towards opening in the biggest English-speaking market, the US. And for US brands, it provides a gateway to Europe “both geographically and in terms of brand profile.”
A number of major European and US luxury retailers opened new stores in the city last year, including Moncler, de Grisogono and Valextra.
Whether it will sacrifice any of that gateway status after the UK leaves the EU was not addressed in the report, although Savills did highlight the continuing growth in global tourism and the importance of London’s geographical location that should help it stay near the top of the tree.
Savills said forecasts by the World Tourism Organisation (UNWTO) suggest international tourist arrivals globally will double to almost 1.8bn by 2030 as low-cost air travel and the expanding and mobile middle class from emerging economies impact the luxury sector.
Europe will remain the biggest tourist market with predictions of a 41% share of all tourists by 2030 and London should be one of the global cities to benefit.
That is partly due to its appeal to Chinese nationals, who buy around 40% of their luxury goods abroad. Chinese tourist arrivals rose 69% in 2015, according to the Office for National Statistics (ONS) and that was before the pound’s Brexit bounce.
Anthony Selwyn, head of Central London retail at Savills, said: “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.”
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