The pandemic has caused a loss of footfall in London due to a lack of tourism, shoppers, and workers; however, a strong recovery is expected now that the city is open, being one of the countries with the most relaxed restrictions. Although low spending and consumer confidence has been revealed this quarter, bubbling domestic tourism and recovery in foreign visitors are enabling London hotel bookings to experience peak periods exceeding pre-COVID levels with reservations hitting over 102.4 percent compared to the same period in 2019. Moreover, over 100,000 Hong Kong people migrated to the UK since the first year of its British National Overseas citizenship scheme, bringing over their spending power and businesses to the region.
Opportunities for Asian Investors
Hong Kong houses several of the world’s most expensive high streets and consumers’ thirst for shopping is carried over to the UK with untapped opportunities for Hong Kong investors and brands. London is one of the most attractive cities for international retail trade companies, with the West End being a vibrant cultural scene as one of the most affluent and fashionable districts, carrying over 250 flagship stores with the presence of well-known consumer brands from Asia. Where Japan was previously a hot destination for flagships during the Olympics, several Japanese brands have re-entered the UK – as seen with iconic brands Uniqlo conjoining with Theory, and Onitsuka Tiger both of which opened their largest global flagship stores on Regent Street.
Majority of the investment comes from US and European brands expanding their brand presence into the capital; though Japan, Korea and Hong Kong are also among the top origins of investment for Asia brands expanding their footprint into London.
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Data from London & Partners, a business growth and destination agency revealed the city has attracted a total of 460 retail trade inward investment projects over the past five years. Given the dormancy of Asian cities with stricter border measures, London has become an attractive destination for Asia retailers looking to scale overseas, evident from Hong Kong businesses investing a total of $1.75 billion (£1.14. billion) between 2016 and 2021.
Laura Citron, CEO at London & Partners explains, “This new data offers further proof that London is a world class consumer destination, offering a multitude of opportunities for international investors looking to expand outside of their home market. The easing of restrictions has led to growing demand from consumers to get out and explore the city, so there’s never been a better time to snap up highly sought-after retail spaces and increase their customer base”.
The agency helps connect and bring brands to West End with prime retail space and has observed a growth in the West End to reach an annual turnover of $14.2 billion (£11.4 billion) by 2025, superseding pre-pandemic levels by 14 percent, driven by the $6.2 billion (£5 billion) capital investment dedicated to the development of the area. This year, the district is also expected to reach a turnover of $10.7 billion (£8.6 billion) as the footfall has returned to three-quarters of pre-pandemic levels.
Reimagining London’s Cultural Scene
London’s West End covers the wider range of Oxford Street, Regent Street, Soho, Bond Street, Piccadilly and Covent Garden where theatres reside, nestled in between the bustling shopping streets and luxury hospitality venues, attracting 200 million visitors a year. The revival of Broadway shows also saw a comeback of footfall from theatregoers.
“London is a vibrant, cosmopolitan area and has a thriving retail scene” comments retail consultant Ian Scott, sharing a number of new and impressive flagships observed from a stroll in the district. The shuttering of iconic stores during the pandemic paved way for new entrants on the high street, including Superdry’s new global flagship on Oxford Street and the first standalone store for DTC sportswear brand Gymshark on Regent Street. Now, coveted retail spaces have become uniquely available post-pandemic in well-known districts.
Upcoming 2023, Hong Kong’s iconic hospitality brand the Peninsula hotel will also be opening its first-ever branch in the heart of Belgravia. “The Peninsula Hotels have always wanted to open a hotel in London, and we waited over 30 years for the perfect site. When our heritage Hong-Kong based brand decided to expand our hospitality business into Europe, it made perfect sense to choose the UK’s dynamic capital city”, shares Sonja Vodusek, Managing Director of The Peninsula London. The hotel has also been seen amping up its digital efforts with its newly built hospitality marketplace, promoting experiences from Paris city tours to Michelin-course meals widely accessible to global customers and domestic guests online.
With many Asian brands such as Miniso and Alibaba looking to expand outside of its home turf, London is positively forecasted with substantial growth potential for Asian brands to establish their next international footprint. However, in competing with the deals and convenience of online retailers, high street shops must remain focused on in-person services and memorable experiences to benefit from the millions of high spending visitors.