London: Luxury retailer confidence drops despite surge in affluent population

Luxury retailers have reported a drop in positivity towards business prospects in London despite a surge in affluent customers both living and visiting the city. According to Walpole’s ‘State of London Luxury Report 2024’, retailer positivity dropped from 71 percent in 2023 to 53 percent in the current year.

The cause for such sentiments was cited to be a mix of macroeconomic uncertainty, global rebalancing of luxury markets and the loss of tax-free shopping for international visitors. This mindset could see an improvement in the coming two to three years, however, with 66 percent of respondents still remaining optimistic.

London has welcomed a surge in high-net-worth individuals calling the city their home, with high-end property prices rising 25 percent between 2023 and 2024, reflecting such demand. An uptick was also recorded in the way of overseas visitors, with a 22 percent increase seen in this group compared to the previous year.

The report did still express concern in regards to the loss of tax-free shopping, which Walpole said had been a drag on London and the UK’s economic performance “at a time when growth is a governmental priority”.

Despite this outlook, however, there was a significant increase in retail investment over 2024, particularly in the second quarter of the year, when Central London retail investment volumes rose by 71 percent YoY, totalling 424 million pounds. These volumes are expected to exceed those reported in 2023.

Walpole also noted an uptick in luxury brands investing in their physical presence, as evidenced by an influx of upsized stores, Cadogan’s 50 million pound investment in Sloane Street, and LVMH’s 165 million pound acquisition of a New Bond Street property. Overall, London luxury retailers did report a resurgence in physical shopping, largely driven by personal shopping services and unique, in-person experiences.

Among these experiences is the increased inclusion of art and culture into a brand’s identity, with 95 percent of luxury brands now considering an association with art and culture imperative to their presentation. Such labels have therefore been increasingly incorporating cultural experiences alongside their core product or service, typically creating multi-experience environments that blend retail, hospitality and culture under one roof.