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Can The West End Stage A Comeback Or Does It Face A Nightmare Before Christmas?

London’s West End retail has made its reputation through big, brash, exciting openings and 29 October epitomised that, with the highly anticipated debut of online athleisure rising star Gymshark on Regent Street.

Replacing the unit previously vacated by U.S. fashion brand J. Crew in a two-storey, 18K SF store, the Solihull-based sports retailer made its permanent retail debut having signed a 10-year lease with The Crown Estate. The store is a statement flagship and brand showcase for the gym-based retailer’s national and international ambitions.

London retains its magic for Gymshark but the West End is facing a crunch this Christmas.

As the retail sector enters the 'golden quarter', the last three months of the year that play an outsized role in retail sales, international brands are still clamouring to be in the West End. But headline openings like Gymshark mask a more troubled picture for the area, with decision not to reintroduce tax-free shopping for tourists a blow to the luxury sector, and demand and rents still way down on the area's heyday.

For a brand like Gymshark to use a physical retail location to boost its global presence, the store had to be in the West End, according to founder Ben Francis, who was at pains to stress the importance of location to the company’s plans, having initially looked at a smaller site in Shoreditch for its store debut.

“In the middle of the pandemic, when everyone predicted that everything would move online, we saw a different future and the opportunity to get space on a prestigious street," Francis said. "So we signed a 10-year deal in central London. We are not opening this store to do the same things as everyone else. We want this store to be unique and special." 

And Gymshark is not the only major recent opening. Uniqlo/Therapy and Superdry have relocated to larger flagships; Ikea is redeveloping the former Topshop at Oxford Circus; Sports Direct invested heavily on its flagship on Oxford Street; footwear brand On will also make its store debut on Regent Street; while Hugo Boss opened there in June. Sook, which has opened on South Moulton Street and Oxford Street, has also provided space for startups and online brands to test space. 

French cosmetics and beauty retailer Sephora has also confirmed that it will open a London flagship next year, after launching a UK website in October.

Oxford Street Struggles

But away from the managed West End estates of Grosvenor, the Crown Estate, Shaftesbury, CapCo and Howard Walden, alarm bells continue to sound along Oxford Street, once the jewel in the West End retail crown.

While the new Labour administration for Westminster City Council has started to crack down to try and reduce the number of the 30-plus American Candy Stores that proliferated during and after the pandemic, Debenhams and House of Fraser have vacated, John Lewis is downsizing, and Marks & Spencer is arguing its case at a planning inquiry around its proposal to demolish and rebuild its landmark Marble Arch store — a move publicly backed by Selfridges and Ikea.

“Rents have pretty much halved on Oxford Street and unless there is a radical reform of the crippling business rates I can’t see any prospect of rental growth in the foreseeable future,” Cross Border Retail founder Mark Burlton said of the street’s current situation.

“Because of the multiple landlord ownership along the street, it has been a case of every man for himself, which rarely ends well. Oxford Street has relied on its name and the fact that a rising tide lifts all boats, but that’s simply not the case any longer,” he added.

The luxury market, focused on Bond Street, has also been rocked by the government’s decision to rescind the reintroduction of tax-free shopping to UK high streets for tourists. The government had pledged to reintroduce the tax-free status at the mini-budget, but in its subsequent announcement by Jeremy Hunt three weeks later decided not to.

Proponents New West End Company — which represents 600 retail, restaurant, hotel and property owners across Bond Street, Oxford Street, Regent Street & Mayfair — and luxury retail organisation Walpole had hoped that the change would bring an extra £2B in spend annually.

Walpole CEO Helen Brocklebank wrote to members to stress the economic impact of the decision after the mini-budget reversal, which puts London at a disadvantage to rivals such as Milan and Paris.

Footfall is down on Oxford Street but the key is spend.

“Walpole’s recent Bain study into high-end tourism [showed] that, until 2019, the UK had a unique advantage, and high-end international visitors to the UK spent 14x mainstream tourists, an injection of around £2K per person per day into our economy," Brocklebank said. "Having become the only country in Europe without tax-free shopping was a significant impediment to post-pandemic recovery, risking our competitiveness, and risking stultifying a $34B industry.” 

West End Can Revive

P-Three co-founder Justin Taylor does believe that the West End can regain some of its lustre, although he conceded that the crucial Christmas trading period coincides with very challenging economic environment.

“The key for the West End will of course be consumer behaviour, confidence and spending," Taylor said. "Clearly this is a critical moment and no one should be making light of the challenges ahead. London is not representative, however, of the wider UK and is proving very resilient. However, footfall is not at the previous highs and it is unlikely it will get back to previous levels, certainly on a consistent daily basis.”

His view is that the length of Oxford Street and the new retail environment in terms of online and shopping habits makes the stretch unsustainable in terms of being considered prime property all the way from Marble Arch to Tottenham Court Road, and being able to sustain prime rents. 

“Rents in some locations have reduced by half," Taylor said. "There are however a record number of available units on Oxford Street, and I think we might be seeing a split on Oxford Street, with a super-prime area between Bond Street and Tottenham Court Road."

Taylor said the setbacks need to spark more creative thinking, in particular the potentially positive impact of revamping the vacated department stores as modern, more attractive retail spaces and making change of use more flexible to enable F&B operators and leisure offers to replace retail sites.

The competitive socialising market from the likes of mini-golf specialist Puttshack and 'immersive art experience' Frameless at Marble Arch, plus the launch of Outernet at Tottenham Court Road, could indicate a way of filling more vacant units and bring a more mixed economy to what is otherwise a retail-dominated thoroughfare.

The issue of disparate management along Oxford Street flagged by Burlton means that any solution is unlikely to head off further demise in the short term, though New West End Company claimed the area will still reach its historical annual turnover of £10B by 2025, after commissioning research from Colliers that showed year-to-date sales are up 109% compared with 2021 (to October 2022), with spend rising faster than footfall.

Debenhams and House of Fraser have both closed on Oxford Street.

A significant part of this growth is being driven by the opening of the Elizabeth Line, plus the recent addition of Bond Street station, which is expected to be the main mode of transport for 13% of visitors into the district by 2023. Increased visitor numbers from the new lines will lead to around a 7% boost in the West End’s annual performance by 2031, creating between £700M and £800M a year in additional sales, NWEC said.

“Shopping patterns and consumer behaviours have changed since the pandemic," Colliers co-Head of Retail Strategy & Analytics Paddy Gamble said following the publication of the report. "So instead of customers visiting perhaps five days, where people might just be browsing, consumers are now coming into the West End maybe three days to work, and with an increased intent to purchase, which is really what is driving the numbers through the tills.” 

Alongside fundamental reforms to business rates, NWEC has also called for a relaxation of Sunday trading laws in London’s two ‘international centres’, the West End and Knightsbridge. Sunday is the busiest shopping day across the West End, and it said that the lifting of limitations would generate around £350M of additional sales per year.

“We need to ensure we make London the most attractive destination for domestic and international visitors alike, stimulating further growth and putting us back on the map," NWEC interim chief executive Dee Corsi said. "We have an eager international audience with cash to spend waiting in the wings. We now simply have to ensure that we’re open for business at the right times.” 

For now, timing is all-important.

The UK’s retail sector is into the so-called golden quarter, where upward of 40% of annual sales are typically recorded. Many of the issues facing London’s West End are not untypical of those nationwide. The difference until now has been that London has managed to remain largely impervious to many of those wider challenges.

“I think we may see retail rationalisation, with those retailers that have two or three stores in the West End consolidating to one or two bigger stores to reduce costs and have stronger stores. Many of these issues are not unique to London, for example Fifth Avenue in Manhattan has similar problems,” Taylor said.

“However, I am cautiously optimistic. I think Christmas can see a comeback for the West End, albeit that it’s off a historically low base.”