London’s polarised retail scene

London’s retail scene is becoming ever more polarised

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On London’s Oxford Street, close to the junction with Tottenham Court Road, Primark is teeming with customers. Cash-strapped shoppers hunting for a bargain mingle with wealthy tourists, both enticed by Primark’s famous cheap chic. The discount store, which opened in September 2012, has proved so successful that Primark is already extending it.

A few minutes stroll away in Regent Street, a former cinema has been transformed into Burberry’s flagship London store, its ornate ceilings and curving staircases signalling its position at the luxury end of the market.

Welcome to London’s polarised retail scene, from cut-price fashion to the full luxury experience.

“In retail terms, [London] is the fashion capital of the world,” says Richard Hyman, the independent analyst who runs the Richard Talks Retail website. “We are not talking about couture – we’re talking about fashion retailing.”

But he adds that retailing is in a state of flux. Price-driven Primark at one end and British brand Burberry at the other encapsulate the new reality in a sector attracting interest from around the world, whether to shop or invest.

At the top end, Hyman says, “it’s about an experience, about a buzz – it’s about engaging the customer and selling an idea”. At the other end, it is all about price.

Indeed, Christine Cross, an independent retail adviser, notes that Oxford Street has almost become a “cut-price heaven, literally bookended by Primark – one at Marble Arch and the other at Tottenham Court Road”.

On the other hand, Burberry’s Regent Street store, which also opened in September 2012, is about more than simply selling products. It is the physical embodiment of the brand, in a world where the physical and the digital are becoming inextricably entwined. When a customer tries on an item, for example, interactive changing room “mirrors” might show images of the garment on the catwalk.

“London is very much an experience-based centre,” says Neil Saunders, managing director of Conlumino, the retail research group. With an immersive experience, retailers have a better chance of getting customers through the door. “The truth is, you have to lure people in, tourists included. You have to pull out all the stops to do that,” he says.

This immersive approach can also help stores stand up to ferocious online competition.

Oxford Street and Regent Street are among London’s best-established retail areas, but new communities of retailers have sprung up over the past five years.

Mount Street, a short walk from upmarket Bond Street, has emerged as a desirable luxury destination, aided by the arrival in 2007 of fashion designer Marc Jacobs. Regent Street itself has become the go-to location for the big US brands, as well as French luxury group Longchamp, which opened its biggest European store there last September.

Covent Garden has had a makeover, attracting Burberry’s first dedicated beauty store and Chanel’s pop-up beauty boutique.

Chiltern Street in Marylebone, a few minutes north of Oxford Street, is reinventing itself as a destination for niche lifestyle and luxury retailers.

Redchurch Street, a once derelict cut-through in Shoreditch, is emerging as the Bond Street of east London, attracting tenants such as APC, the French retailer known for its utilitarian chic, and Hostem, the upmarket menswear boutique.

Sunspel, the Nottingham-based clothing and underwear company, has opened stores on both Chiltern Street and Redchurch Street. Nicholas Brooke, co-owner and chief executive, says the retailer, which began making polo shirts in the 1950s and introduced boxer shorts to Britain in 1947, looks for slightly “off-prime” locations with plenty of character and a neighbourhood feel.

“That is a very London thing. If you look at London, it’s a collection of neighbourhoods,” Brooke says. Part of the appeal of Chiltern Street, he adds, is its eclectic mix of independent shops, which range from a whisky shop to a hardware store and purveyors of musical instruments.

New communities often arise when rents in more established locations soar. But retail experts say there are other factors at play.

“Some of the newer brands don’t want to be seen as being associated with the older retail scene. They want to be associated with newer areas,” says Conlumino’s Neil Saunders.

The whole of London retail, however, might benefit if the visa system for Chinese visitors is reformed, as luxury retailers hope. They estimate that 25 per cent more Chinese visit Paris than London because Chinese visitors to the UK and Europe are obliged to apply for two visas: one to visit 26 countries in Europe – known as a Schengen visa – and a second, separate visa for UK entry. A pilot scheme, launched last year, allows Chinese tour operators to complete one application for the Schengen visa and the UK visa at the same time, for their travellers.

From this autumn, Chinese visitors will be able to use an Irish visitor visa to travel to Britain, without the need for a separate UK visa, and vice versa. Talks are also continuing with European partners about further streamlining visa processes with Schengen arrangements to make trips to the UK easier for Chinese visitors. At the same time, a simpler, more user-friendly form for independent travellers is being introduced.

The UK China Visa Alliance, which is lobbying for reform, says it is encouraged by the initiatives, while Saunders adds: “London will really benefit from [visa reform]. It will boost the luxury sector, the West End and elsewhere quite significantly.”


The big names on the (upmarket) high street

Burberry’s flagship store on Regent Street, which has brought physical and digital experiences of the brand together, was the brainchild of former chief executive Angela Ahrendts.

Now that she has moved on to set the direction of Apple’s stores, the helm at Burberry has been taken by Christopher Bailey, creative director since 2001, who succeeded Ahrendts in May.

Bailey will be an “unconventional” chief executive, predict those in the know. But he will continue to have creative control over areas of the business such as new stores. And he will uphold Ahrendts’ mantra that Burberry must embrace the digital world.

Selfridges is another London retail landmark. The driving force is Alannah Weston, daughter of department store magnate Galen Weston, who owns the department store. She has been Selfridges’ creative director since the Westons acquired the store in 2004, and earlier this year was promoted to deputy chairman. Given her family’s ownership of the store, her initial appointment was greeted with scepticism in some quarters.

However, she is credited with reinvigorating Selfridges and elevating the store’s events. In the year to January 2012, sales exceeded £1bn for the first time. Christine Cross, an independent retail adviser, says: “Weston has driven the current ethos at the store, from the flamboyant windows to the focus on events and exhibitions.”

Selfridges plans to spend £300m on an architectural revamp of its flagship site, which it describes as “the biggest ever investment for a single project by a department store anywhere in the world”.

Across town, at Harrods, Michael Ward, managing director, has also helped to lift sales at the department store, which was acquired by Qatar Holding from Mohamed Al Fayed four years ago for £1.5bn.

Ward’s trajectory to his place as a pillar of London’s luxury establishment was unusual. Trained as an accountant, he was finance director of Liquorice Allsorts maker Bassett Foods and then cider business HP Bulmer before entering the retail industry in 1994 as managing director of Lloyds Chemists. He switched to the private equity world, working at Apax as the retail partner, but after two years left in 2005 to join Harrods.

Sales at Harrods topped £1bn for the first time in the year to January 2011, and last year the chain paid a £100m dividend to its Qatari owners. Ward has “transformed Harrods from a ‘look, don’t touch’ glitzy icon, to a fascinating shopping experience”, says Cross.

They will soon be joined by a new London retail personality. Stacey Cartwright, the highly regarded former finance director of Burberry, has been named chief executive of luxury department store chain Harvey Nichols. According to Moira Benigson, managing partner at MBS Group, the headhunter that placed Cartwright with Harvey Nichols, the store group’s new chief understands finance, consumers and luxury. “She is potentially a FTSE 100 chief executive,” says Benigson.


Ruff and smooth

As in many cities, shopping has been so central to London’s development that even its street names reflect the making of past retail fortunes, writes Feargus O’Sullivan.

Piccadilly was home to a manufacturer made wealthy by the sale of piccadills, the broad, lacy collars that took over from ruffs as the fashionable 17th-century gentleman’s trademark.

While the fashion soon faded, the Piccadilly area remains a centre for fancy shirt-making, – its parallel neighbour Jermyn Street is home to bespoke tailors who stitch handmade shirts for the likes of Prince Charles.

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