The Crossrail Effect

In the case of London’s West End, the expansion in retail sales may be even more pronounced due to the arrival of Crossrail in 2018. Harper Dennis Hobbs, on behalf of New West End Company, estimate that Crossrail could result in a 27.8% increase in West End retail sales to £11.3bn by 2020 due to an additional 60m visits each year, and major infrastructure developments with substantial retail, office and residential developments.

^{▲ TfL upgrade to Tottenham Court Road Station, New Plaza Entrance}

While major infrastructure projects, like Crossrail, will have a beneficial impact on the volume of retail sales that could be captured by the West End, macro drivers such as population and economic growth at a city level will also be instrumental. London is forecast to see population growth of 1.2% per annum over the next five years exceeding the 0.5% growth forecast for both New York and Paris with economic growth forecast to average 3.2% over the same period. This faster level of growth has been attributed in part to London’s time zone, sitting between the US and Asia, the quality of its workforce, and its relatively low corporation and personal tax regime, which attracts new businesses and fuels expansion. This is aiding population growth and in turn retail spend ahead of other Global Cities particularly those in Europe.

The retail sales profile across the Global Cities is also evident in the location survey responses. When asked if they were happy with current trading performance, retailers in New York reported the greatest proportion who stated they were satisfied to very satisfied (90.5%). In London’s West End it was 69.5%, ranking it fifth ahead of Milan and Singapore. This sentiment regarding trade performance does reflect a specific point in time. In the case of London’s West End it is likely to have been heavily influenced by the disruption experienced during Crossrail works and currency fluctuations which contributed to a squeeze in retail spend from Eurozone visitors, who form the bulk of overseas visitors to London. This potential short term impact on trading performance is emphasised by the fact that 96% of these same respondents would recommend London’s West End as a place to trade, the highest proportional response across the seven Global Cities (see Figure 5).

^{Source: The Retail Group}