UK retailers have had a lot to complain about recently, including business rates and National Insurance contributions. But one of their biggest bugbears is the so-called tourist tax and the government has signalled that it might be open to revisiting the issue.
Photo: Pexels/Public domain
VAT-free shopping for tourists was all-but-abolished in the wake of Brexit, despite retailers having expected/hoped that it would be expended to EU shoppers, potentially sparking a tourist shopping boom in Britain.
The then-Conservative government insisted VAT refunds cost it too much revenue (said to be £2 billion a year) and didn’t “directly benefit” British people. That was despite studies claiming the contrary and evidence that affluent consumers were shopping in Paris and Milan instead of the UK’s destination cities.
But while the current Labour government has stayed tight-lipped on the subject so far, the Culture Secretary has said in an interview with Elle that she’s heard “very loud and clear” calls from figures in fashion to bring back the perk. Lisa Nandy stressed that change isn’t currently on the agenda but the government would be “happy to look at the evidence”.
She said that if VAT-free shopping can be shown to be “a benefit, it’s something that we’ll explore, but at the moment, that’s not something we’re proposing to do”.
Since VAT-free shopping was scrapped in 2021, reports such as one from the Centre for Economics and Business Research have presented strong evidence to support its return. The CEBR claimed it cost the country £11.1 billion in lost GDP annually and means two million people are put off from visiting Britain.
Meanwhile, other reports have shown that European countries offering the VAT-free perk have seen higher tourist flows.
And Britain’s potential benefit from bringing back the perk wouldn’t only be about returning to the pre-Brexit status quo. If it was extended to EU shoppers, it would make the UK the only European destination to offer tax-free shopping to the many millions of consumers on its doorstep.
While the Treasury would lose the VAT on the goods sold, the claimed boost to GDP would come from the economic activity that higher tourist flows would spur. That would mean higher retail sales and higher retailer profits, more retail jobs, more hotels and restaurants booked and all the other activities tourists indulge in, all of which would result in more tax going to the Treasury.
Chanel continues to put support behind its latest Chance variant, Eau Splendide, as well as its existing variants following the recent announcement of pop star Angèle as the new scent’s face.
Chanel
Its latest initiative is the Chance Street pop-up in Shoreditch, London, which is open now until 5 May.
The “immersive and interactive” space allows visitors to “Take a Chance” while celebrating the new variant and the Chance brand in general.
The outside of the Chance space is painted in a bespoke, pop art-inspired mural highlighting the custom purple hue of the new fragrance.
Visitors can try their luck at engaging and unexpected games, while discovering the various Chance scents. There’s a fragrance discovery bar offering home a deeper dive into Chance itself, as well as into Chance Eau Fraîche, Chance Eau Tendre, Chance Eau Vive and, of course, Eau Splendide.
And there’s complimentary candy floss inspired by the new fragrance on offer too.
The space replicates the hall of mirrors seen in the new Eau Splendide film, which is also the inspiration behind the mural seen at the pop-up.
Much of what’s available there is free but there are bookable paid-for services too, such as a £60, 75-minute personalised make-up look. Then there’s a £60, 120-minutes evening event including a live DJ plus cocktails and canapés. The booking fee is redeemable against purchases at the pop-up and includes an elevated goodie bag.
M&S shares fell by over 2% on Monday morning after the company had been forced to pause online sales in the UK, Ireland and beyond due to a cyber attack.
M&S
The shares had also fallen on Friday when news of the online pause was first released.
M&S had issued a release about the cyber attack earlier in the week and despite few details being available, it was reported that shoppers were having trouble paying via contactless in-store.
That in itself was bad enough, but having to completely stop online orders (including via some of its international websites) is a major disruption for the business, especially at a time when summer-season-related goods from fashion to foods could be expected to boom in a mini heatwave.
The website is still open for shoppers to browse and add products to their basket but a discreet note at the top of the page mentions the transactional pause.
The shares had slumped around 5% on Friday, wiping millions of pounds off its market value. The share price had peaked this year at 411.3p as recently as 17 April but is now down over 8% in the past five trading days at 376.4p, giving M&S a market value of £7.74 billion.
The company is working with external cyber security experts as it investigates and manages the incident and has also reported it to the National Cyber Security Centre.
Several days of no online sales could put a major dent in M&S’s figures when it next reports its results Last year, M&S said its current 9.4 million regular online customers account for 33% of total sales. The retailer has said it wants half of its fashion and homeware sales to be taking place online eventually.
Its total sales rose 5.8% to £6.524 billion in the first half and it’s due to report figures for the full year late next month.
Property and shopping malls giant Unibail-Rodamco-Westfield (URW) has release a Q1 trading update that included news of tenant sales being up 2.1% and footfall up 0.4%, despite unfavourable calendar effects.
Westfield London
The group, which is behind the huge Westfield branded malls and others in London, the US and large parts of mainland Europe, also reported the successful retail opening of Westfield Hamburg-Überseequartier on April 8, which has seen over a million visits in the first two weeks. And Q1 saw the expansion of Westfield Rise to the US to generate more revenues through its in-house retail media and experiential division.
Looking at proportionate turnover for the business, it amounted to €943.3 million, which was stable year on year, mainly reflecting the acquisitions and disposals achieved as well as various other one-off effects. The company owns vast property assets, including offices, but at shopping centres in particular gross rental income (GRI) did increase, albeit only by 0.8% to €621.7 million. And on a like-for-like basis, GRI was up 2.6%.
As mentioned, both tenant sales and footfall increased during the first quarter with the rise in sales being bigger than the rise in footfall and showing that those who visited spent more.
As also mentioned, these figures were achieved despite unfavourable calendar effects. For instance 2024 was a leap year and therefore had an extra trading day, while Q1 last year also included Easter, which will benefit Q2 this time.
Looking by region the company said that tenant sales at US flagships increase 3.4% with footfall up 1.1%, while those sales in Northern Europe rose 2.8% despite footfall being down 1.9%. In Central and Eastern Europe tenant sales actually dropped 0.3% as footfall was down 2.5% but in Southern Europe those two figures were a positive 2.3% and 2.7%, respectively.