Tourists looking to buy affordable luxury are coming to the UK in droves. Chinese shoppers, who at home pay hefty taxes on European designer brands, are coming to bag a bargain from beloved brands Burberry, Gucci and Prada, to name but a few. All which can be bought from Bicester Village in Oxfordshire.
According to the FT, the changing appetites of Asian shoppers have driven share prices of luxury groups up and down during the course of 2011. Concern that the devastating earthquake that hit Japan – one of the most important markets for luxury goods – in March would stall demand for top brands was cushioned by burgeoning demand from newly affluent Chinese consumers. However, over the summer, fears of a slowdown in China’s economy wiped as much as 25 per cent off the share prices of luxury groups, including Burberry, which is expanding on the mainland.
Angela Ahrendts, Burberry’s chief executive, has coined the term “Travelling Luxury Consumer” or TLC to describe its key customer group, arguing this is a more powerful force than the Chinese market alone, which now accounts for over 10 per cent of Burberry’s sales.
“When Chinese consumers travel, they spend six times more than when they stay at home,” she explains. “Saying ‘I bought this in London’ adds further cachet.” For this reason, Burberry has sunk £20m into upgrading its London flagship stores, with Regent Street on target to complete “just in time for the Olympics” next year.
Other London purveyors of luxury are also feeling flush. High spending foreign tourists have powered a 32 per cent boost in post-tax annual profits at upmarket London department store Harvey Nichols, which rose to £7.25m in the year to April, according to documents filed in Companies House on Friday.
Harrods, its larger Knightsbridge neighbour, broke through the £1bn sales barrier in 2011, posting a 39 per cent rise in pre-tax profits to £108m and reporting that the Chinese were its top-spending international visitors, blowing an average of £3,500 a visit.
The Chinese connoisseur who spends £25,000 on vintage wine might grab the headlines, but the majority of shoppers are of much smaller means. This helps explains the draw of Bicester, which boasts the only train station in the UK to have signs translated into Mandarin and Arabic, and is now the UK’s third-biggest tourist shopping destination after Harrods and Selfridges.
Image: Asian shoppers