Mulberry, the renowned luxury leather goods brand, has made the difficult decision to close its flagship store on London’s prestigious Bond Street. The closure comes as a result of the decline in tourist spending, which has been exacerbated by the abolition of VAT-free shopping for tourists visiting the UK. This move highlights the negative impact that the withdrawal of this tax incentive has had on the retail industry, particularly in attracting high-spending luxury shoppers who have yet to return post-pandemic.
Thierry Andretta, the CEO of Mulberry, had previously highlighted the lack of tourist spend in London’s retail sector. The closure of the Bond Street store, known for being one of the most exclusive shopping destinations, further emphasizes the detrimental effects of this trend. While Mulberry still maintains stores on Regent Street and in the new Battersea Power Station mall, these locations cater to both tourists and local shoppers, unlike the Bond Street store which solely targeted tourists.
Mulberry currently operates 55 shops across the UK, including six in London. The company has made arrangements to relocate the staff from the Bond Street store to other branches in order to avoid redundancies. Mulberry has attributed the notable decline in footfall and sales at the Bond Street store to the absence of VAT-free shopping, which has historically been a major attraction for tourists. In addition to this, the brand also cited high business rates and rents as contributing factors to the closure.
Despite the closure, Mulberry expressed its hope to open another store on Bond Street in the future. This shows their commitment to the location and their belief in its potential as a thriving luxury shopping destination. However, for the time being, the absence of VAT-free shopping for non-EU tourists, combined with the high costs of operating in the area, has made it unsustainable for Mulberry to continue operating their flagship store on Bond Street.
The decision to abolish VAT-free shopping for non-EU tourists was made by the UK government after the country’s departure from the EU. Initially, there were expectations that tax-free incentives would be expanded to include EU shoppers, which would have given the UK a competitive edge. However, the decision to abolish this perk for all tourists was a revenue-raising measure. Despite hopes that this move would benefit the UK, studies have shown that it will ultimately result in lost revenue. Furthermore, there is anecdotal evidence to suggest that shoppers who would have previously spent heavily in the UK are now opting for other European cities for their shopping experiences.
Last year, there were plans to reintroduce tax-free shopping as part of a low-tax growth agenda. However, following the market downturn caused by the mini-budget, the new Chancellor of the Exchequer decided to re-abolish tax-free shopping for tourists. Despite ongoing pressure from retailers, business groups, the Mayor of London, MPs, and others, there has been no indication of a change in this policy.
Useful links related to the article:
– Mulberry Official Website
– UK Government Guide to Tax-Free Shopping
