Festive forecast: What’s in store for London’s West End this Christmas?

It’s never too early to talk about Christmas in London’s West End. A walk down Oxford Street will tell you there’s already anticipation in the air as work begins to put up Christmas lights and decorations. 

As retailers gear up for the bumper trading period, NWEC reveals how the tourist tax, pedestrianisation and consumer confidence will affect festive spending on London’s iconic Oxford, Regent and Bond Streets this year. 

A happy Christmas?

Festive spending in London’s West End district, which includes 600 retailers, hotels and other businesses on Oxford Street, Regent Street and Bond Street is expected to reach £1.7bn this year. 

This will mark a 3.2% increase in spending as compared to the months of November and December last year, NWEC forecast revealed. 

While the economic outlook and consumer confidence is better than this time last year, domestic shoppers remain cautious with modest spend growth of 1.6%. 

An influx of international tourists to the capital is expected to drive international spending up by 5.8% as compared to 2023. 

International spending is expected to be up 5.8% as compared to 2023, driven by an influx of international tourists as flight bookings to London over the festive period are already 11% higher than last year. 

This is driven by visitors from the Gulf (+26%), followed by China (+20%) and the US (+19%) and follows a strong year for UK tourism, with international visitors to London up 9% year to date.

Overall festive spending is expected to reach its peak the weekend of 7-8 December, with consumers forecast to spend between £40m-£50m across West End businesses. 

Dee Corsi, chief executive, NWEC said the West End acts as a “key driver of growth for the national and local economy all year-round. And this festive season, we are pleased to be forecasting year-on-year growth once again.

“International visitors, in particular, have been fundamental to the district’s recent performance – but much needs to be done to unlock this demographic’s full spending potential.”

Pedestrianisation gamble

The Mayor of London’s plans to fully pedestrianise Oxford Street garnered mixed reviews across sectors, but NWEC Head of Insights, Paddy Gamble has an open mind. 

He adds that it is an encouraging first step that will offer more attractions to consumers, change the dynamic of the area and help capture more people for longer and more frequently.  

This is also echoed in a new YouGov survey that showed that 63% or six in ten Londoners support pedestrianising Oxford Street, while 33% strongly supported it.

Slightly more than half of Londoners said they had been to Oxford Street in the previous 12 months; of this group, 72% supported pedestrianising the area, as did 53% of those who have not visited recently.

NWEC data showed Oxford Street has been the most resilient as total year to date sales were up 0.4% as compared to Regent Street (up 0.1%) and Bond Street (down 1.2%). 

Gamble explained that Bond Street, which is home to a number of luxury retailers, was particularly affected by a fall in international sales (down 3.3%) due to the absence of tax-free shopping. Out of the three main streets, Bond Street also had the biggest drop (down 3.2%) in domestic sales, contributing to its overall sales decline. 

Councillor Adam Hug, leader of Westminster City Council, says Oxford Street’s resilience is due to a steady return of retailers to the area and the ongoing work to cut down on number of candy stores. 

“On Oxford Street, we have seen a steady conveyor belt of big-name retailers taking up space and the demise of the little-lamented candy stores. As a local authority we have done our bit by making life hard for unscrupulous traders while supporting innovative ideas like pop-up stores for small companies.” 

Tourists vs tourist spend

While the volume of international visitors to is on the rise, the absence of tax-free shopping has led to a fall in conversion to sales.  

In 2023, retail businesses in the district lost a total of £400m in spend due to the absence of tax-free shopping. 

The financial loss is on course to be greater this year, with a projected loss of £220m already in H1 2024, despite continued growth in international visitor numbers.

The number of international visitors to London was 3% above pre-pandemic levels, but spend in the West End fell nearly 12% in the first half of the year versus H1 2019, when tourists still benefited from VAT-free shopping in the UK. 

Corsi said: “It is bittersweet for the West End that, whilst London remains a highly desirable global travel destination, the absence of tax-free shopping continues to act as a drag on overall spending growth. 

“Critically, the loss of £400 million in unrealised sales last year in the West End alone is just a small part of this story; fewer sales on the shop floor means fewer tourists in restaurants and hotels, and a knock-on impact on our entire tourism ecosystem. If the Government is serious about returning the country to growth, tax-free shopping presents a rare, golden opportunity to do so.”