Long known as one of Europe's busiest retail destinations, Oxford Street has traditionally been a magnet for fashion fans, tourists and office workers. But in recent years, the street that stretches for more than a mile in length has faced a wave of challenges, from the pandemic seriously denting footfall, many would-be customers working from home, to high profile tenants such as TopShop and Debenhams exiting.
On top of that there was a large number of tacky “American-style” candy shops that popped up, which many considered unattractive.
However, 2023 marked a "huge year" for Oxford Street, according to Sam Foyle, co-head of prime global retail at property consultancy Savills. He points to significant retail investment into the street, vacancy rates returning to pre-Covid levels, and the return of HMV to its flagship location.
So what has helped the area to bounce back and attract new occupiers, and will this momentum continue into the coming year? Are there obstacles that could setback progress?
Looking at efforts to make Oxford Street more appealing, July saw an update that small businesses were being offered the chance to take over a shop, rent-free, as part of a new project launched by Westminster City Council in partnership with New West End Company. Innovative, cutting-edge and up-and-coming brands were invited to apply with hopes to activate empty spaces previously taken up by low quality occupiers such as American candy stores.
Meanwhile a number of established companies made the decision to open new stores, including Footasylum whose CEO Barry Bown said at the time of the September opening: “Oxford Street is by far and away the UK’s most important and sought after physical retail location."
He added: "As well as attracting hundreds of millions of shoppers every year, it is also a must-visit for any global brand seeking to understand the UK’s fashion landscape."
Among others that set up shop there over the past 12 months are boot maker Dr Martens, beauty brand Rituals and jewellery company Pandora.
Seeing such a host of retailers flock there will no doubt prompt some competitors to also eye the location.
Other factors that may have helped entice businesses include the opening of the Bond Street Elizabeth Line station boosting visitor numbers to the area, and tourist and domestic footfall picking up. Earlier this month Transport for London said the capital is continuing "to roar back from the pandemic this festive season", with soaring ridership numbers at key Tube stations close to Christmas attractions. TfL added that entries and exits at Oxford Circus station were 27% higher on Black Friday than on average for each of the previous four Fridays.
New entrants to Oxford Street that have been impressed so far with their new home include lifestyle brand MINISO. UK chief operating officer Saad Usman says: "While December trading has not yet come to a close, trading this month at MINISO Oxford Street has already been up on the previous month and the response from fans old and new is encouraging to see."
Usman continues: "Regardless of any wider industry fluctuations in footfall, Oxford Street remains a prominent location, and our presence there has a positive reverberation effect on our brand awareness and equity, so for us, it retains its attraction as a global hub for accessible retail, and we are cautiously optimistic for a successful 2024."
Oxford Street has also benefited from the 2023 business rates revaluation, which came into effect from April 1. It was based on rateable values from April 2021 and a study by property agent Knight Frank found retailers on the famous shopping street would see their rates liability fall to £91 million from £151 million.
Rob Hargreaves, partner, central London retail at Knight Frank says: “The business rates revaluation has delivered a major boost for the street, with retailers now paying on average 40% less than last year, and the opening of the Elizabeth Line at both Tottenham Court Road and Bond Street has further improved connectivity and increased footfall."
Hargreaves adds: "The crackdown on candy stores has improved the streetscape and also reassured leading retailers that Oxford Street is a location that can help enhance their brand."
However, for some firms the business rates burden could be back as a headache. A host of companies face collectively paying £575.6 million extra in business rates on London properties after missing out on certain support measures announced by the Chancellor in November. Data from real estate advisory firm Altus Group shows there are some 61,650 non-domestic properties in the capital with a rateable value of more than £51,000, the threshold for the freeze to the small business multiplier announced by Jeremy Hunt.
The freeze is aimed at protecting over a million ratepayers from the impacts of inflation, but the standard multiplier (paid by properties with a rateable value of £51,000 or more) will be uprated by September’s CPI next April (6.7%). That could hit some retailers.
Another headache that remains for certain retailers, particularly upmarket ones, is the 2021 move to axe VAT-free shopping, making purchases in the UK 20% more costly for international visitors.
the opening of the Elizabeth Line at both Tottenham Court Road and Bond Street has further improved connectivity and increased footfall
There is also the cost of living crisis that could hit spending across the wider retail sector. Paul Martin, UK head of retail at KPMG says: “The latest KPMG/RetailNext Retail Health Index found that 2023 ended with a marked slowdown in consumer demand as the economic challenges of the last year finally fed through to consumer resilience, and the retail sector will continue to see significant downward pressures on demand, and margin, for in the early part of 2024."
Martin says he would expect consumer confidence to pick up by the Spring, but "this is the exact time that retailers will be hit by hefty increases in minimum wage and business rates which will impact the bottom line".
But Savills' Foyle's comments suggest that retailers look committed to heading to Oxford Street. He says there are currently 22 deals under offer or just signed, yet to open.
"This is a diverse mix of fashion, beauty, sports, consumer brands, food and online brands taking first stores. 2024 will be a constant of new openings and continued momentum, to take Oxford Street back to its globally iconic position," adds Foyle.
