The British press is awash with news of the retail apocalypse of the last two years—specifically how Hurricane Brexit has stormed the high street, leaving destruction in its wake.
However, one retail sector that appears to be surviving the downturn is luxury, with high-end brands and department stores reporting discernible increases for 2018. This is due in part to the historical weakness of the pound. Luxury shoppers tend to be more internationally minded than the rest of the population, and they are now making the choice to buy in the U.K. rather than abroad.
London is also flooded with international tourists and ultra-high-net-worth residents (many of whom use foreign bank accounts that are unaffected by the currency crash), who continue to spend without any fear of the looming political crisis. As a result, while mid-range and high street fashion chains are shutting up shop, luxury brands are continuing to open new stores in expensive central London locations at pre-2016 rates.
Under the glittering lights of New Bond Street and along the manicured pavements of Sloane Street, boutiques are opening on a weekly basis. In the last few months, Tag Heuer, Alaia, Loewe, Givenchy, Alexander McQueen and Roger Vivier have all announced openings in Mayfair. Givenchy, meanwhile, is launching its first London flagship in a dazzling location that spreads across Bond Street, Grafton Street and Albemarle Street.
Estate agent Saville’s recently released a report saying that luxury openings are moving away from the traditional Asia Pacific markets (such as Hong Kong and Singapore) to focus more on core ‘destination’ markets in North America and Europe—specifically London and New York.
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“Changes in the luxury market mean there may not be the same level of luxury brand store openings going forward, but rather a focus on key destination markets, of which London is one,” said Anthony Selwyn, head of London & international retail at Savills.
British-made brands continue to grow, too. Burberry has reported a 3 percent rise in underlying sales in June. Chief executive Marco Gobbetti is repositioning the company in a higher luxury segment and, once the plan has been implemented, is hoping for even higher returns.
Vivienne Westwood and Stella McCartney have both reported a modest increase in sales for 2018—Vivienne Westwood’s label achieved sales of 40.8 million pounds ($51.7 million), up from 37.5 million pounds ($47.5 million) while Stella McCartney’s sales hit 42.5 million pounds ($53.8 million), up from 41.7 million pounds ($52.8 million).
And while mid-range department stores are struggling to survive, luxury ones are stronger than ever. Harrods saw sales climb in the last year, reaching 862.5 million pounds ($1.09 billion), up 4.6 percent. Selfridges—a highly creative multi-brand store selling luxury fashion, beauty and food—has reported another year of very successful returns. For the first quarter of 2018, sales hit 1.75 billion pounds ($2.2 billion), up 11.5 percent.
“Why is Selfridges so successful? Every winning retailer has one core thing in common—customer focus,” said retail analyst Richard Hyman. “Many say they are customer centric, but very few actually are. That’s why they are on sale most of the time. Selfridges has a program of constant refreshment—every couple of weeks there is a new department, a new event, a new brand or two, a new service or two. This dynamism helps to make Selfridges special—there is a vast chasm between talking about experiential shopping and actually delivering it. This is retail innovation —constant newness. And the excitement crossing the threshold is palpable.”
However, it’s not all rosy in the world of luxury retail, as Orla Kiely—a brand favored by the Duchess of Cambridge—went out of business in September, with news of more than 7.25 million pounds ($9.19 million) in debts coming to light earlier this week.
And there is no doubt a hard Brexit—once it is implemented—will have an impact on luxury brands, in particular when it comes to staffing, given 90 percent of high-end labels employ EU nationals on the shop floor. “We are seeing luxury brands with almost 40 percent of their workforce being made up of EU citizens,” said commentator Tamara Cincik of lobbying firm, Fashion Roundtable. “If that right is removed, they will struggle to find an equally qualified workforce to replace them.”
Overall, London luxury is surviving the Brexit retail apocalypse—for now. In one of the greatest political ironies of recent decades, the capital was one of few regions in England that voted overwhelmingly to remain in the EU, and yet—thanks to its international, monied population and its reputation as a world market—it is weathering the storm more easily than the pro-Brexit constituencies it shares an island with.