Luxury Shoppers in London Seem Unfazed by Market Free Fall
London — Twenty-four hours after the world’s financial markets sustained a temporary free fall, wiping out almost $3 trillion in value from global stocks over three days, the dark clouds had yet to dampen the spirits of luxury shoppers on the streets of London.
On a typical wet and windy British midsummer day on Bond Street, home to some of the most expensive retail square footage in the world, groups of Chinese tourists armed with Nike sneakers, Burberry umbrellas and Gucci bowling bags braved the downpours.
Few appeared spooked by the dramatic market activity of recent months.
“We have been looking forward to this trip for so long, we would never have changed our plans because of what the headlines in the newspapers say,” said one visitor from Beijing laden with bags from Tod’s, Tory Burch and Smythson, who declined to give her name.
Down the road in another store, an immaculately dressed Mandarin-speaking sales assistant quietly agreed that the global market seemed to be far from shoppers’ top concern.
“We’ve had lots of American families over for the summer holidays,” he said. “And from the Middle East, too. The demand from Asia is still there, as far as I can see, maybe slightly slower this season but stronger than ever from other markets. Things didn’t slow down in the wake of 2008,” he added, before leaping to attention to assist a hijab-clad mother and daughter wearing matching Fendi sunglasses.
On the other side of Hyde Park Corner in Knightsbridge, the gilded halls of Harrods, one of Britain’s most opulent department stores, continued to surge with shoppers. From the crowds snaking up the exotic escalators, weighed down by new purchases, to the throngs gathered in the cool and cloistered accessories rooms, visitors remained plentiful.
“I come every summer with my family from Kuwait from May to October and have done so for years,” said Faisal Said, 36, who was sporting a Panerai watch and Supreme baseball cap while walking briskly through the food court. “We base ourselves here in London but travel around the continent also.”
Mr. Said, who has a portfolio of investments, said he had seen mobile alerts about the domino effect of the felling of global markets in recent days, but noted that what goes down also comes up, and that consumer shopping habits don’t always sync with the peaks and troughs of equities in foreign countries.
“When the oil price fell, that was a disaster for many people,” he said, “but not lots of shoppers in America. Didn’t they spend less on gas for their cars but more in their stores? To me, these things don’t always have immediate or obvious effects.”
He’s not the only one to think so.
Most industry observers suggest that, while worrisome, currency devaluations and recent market declines will not be enough to offset the long-term compounding of global economic growth and consumers’ appetite for luxury goods.
In the wake of the 2008 economic crisis, the financial sector boomed. And while the slump in Hong Kong spending has exacted a level of damage for some brands over the last 12 months, the malls of mainland China have never been engines of growth, given the hefty import taxes and the savings to shoppers going abroad — to South Korea, Singapore or even Europe.
“Let’s face it,” said Michael Ward, the managing director for Harrods. “The bulk of luxury consumption by value is made by high-net-worth individuals who can afford to lose some money on the stock market without changing their lifestyles too much or thinking twice about purchases.”
He said a slowdown by Chinese shoppers to Britain over the last year had more to do with international travel hassles than the shuddering Chinese economy. “The Chinese have been spending less here because of the difficulty of applying for a U.K. tourist visa,” Mr. Ward said. “Many just head over to Paris, instead, to make their purchases.”
There will have to be quite a balancing act in the coming months given the macro uncertainty on the horizon, said Luca Solca, an analyst at the investment firm Exane BNP Paribas. “This business is based on alchemy, not science,” Mr. Solca said. “Things could be better, but they could also be far, far worse.