London Calling in Pre-Ramadan Rush

LONDON, United Kingdom — If the Skylark's song heralds the start of spring in London, it is the roaring sound of the supercar that marks the start of the summer — and, with it, a burst of spending along the key luxury corridors of the British capital in the weeks leading up to the Islamic holy month of Ramadan.

During what is dubbed the ‘Ramadan Rush,’ an influx of wealthy Middle Eastern visitors descends on London to shop, socialise and shop some more. “The period around Ramadan is one of the most important events in the UK international shopper calendar, with luxury hotels and retailers boosted by the influx from Qatar, UAE, Saudi Arabia and Kuwait,” read a recent statement issued by Global Blue, the tax-free shopping company.

“Last year, spend by Arabic shoppers was up 43 percent for the period and as retailers and hotels improve their services to accommodate them… we expect spend growth to remain strong. When we group the Middle East, rather than split nationally, it rivals China on an annual basis,” added Gordon Clark, Global Blue’s UK manager.

Paris may win the selfie-stick wars, attracting more tourists than its rival across the channel, but it is in London's Mayfair, Knightsbridge and Sloane Square areas that a sizable amount of Middle Eastern wealth is spent.

One key driver is the presence of a Middle Eastern diaspora, cultural tolerance and the draw of Central London's property market, where prices have increased by 41 percent since their peak prior to the global financial crisis. “Many wealthy Arabs have their European quarters in London. They use London as a shopping destination and as a place to spend the summer away from the searing heat of the Gulf,” explained Luca Solca, head of luxury goods at Exane BNP Paribas.

“There is a big community of Middle Eastern people in London, families, relatives and groups of friends come to visit them,” added Mario Ortelli, a senior analyst at Bernstein. “London is an English speaking country; from a legal point of view it is a good place to bring your money to; it is a safe environment.”

According to a study by Global Blue, amongst visiting Americans, the average spend per transaction in the stores monitored by Global Blue in June 2014 was 512 pounds. By contrast, visitors from Saudi Arabia, United Arab Emirates and Qatar spent 732, 1120 and 1432 pounds, respectively. What’s more, fashion is the most popular category for these shoppers, who spend an average 931 pounds per transaction in the category, according to Global Blue.

“What is impressive is the spend per capita. There is a higher share of high net worth individuals in the Middle Eastern customer base [in London] than in other nationalities. One of the activities Middle Eastern consumers like the most is shopping. They spend much more time in shops [in comparison] to the typical European that comes to London, who spends more time walking around the city or going to museums. Many [Middle Eastern consumers] have seen London many times, so they devote more time to purchases,” said Ortelli.

The shopping infrastructure of London is also more in tune with Arabic shopping habits than other fashion capitals. “London, in comparison to other European cities, offers more department stores and these customers usually prefer the environment of the department store, where they can find different brands, rather than go from one boutique to another. The [demographic] does not like to move too much, for the traditional reason of the heat in the Middle East — they prefer indoor spaces,” said Ortelli.

Indeed, the annual "Harrods Hajj" (a play on the Arabic word for pilgrimage) as well as trips to Harvey Nichols and Selfridges have become popular activities amongst visitors from the Middle East. And, in response, these retailers are tailoring their offering and services to tap the opportunity.

"Our international customers are incredibly discerning and clued-up on product. They are looking for one-off pieces, limited editions or bespoke items, and are prepared to pay a higher price point for this level of exclusivity," said Shadi Halliwell, group marketing and creative director of Harvey Nichols. This season, the department store is targeting this consumer base with exclusive products including an 18-karat gold-plated handbag by Mark Cross and a pair of sunglasses by Linda Farrow, estimated to cost $10,000.

“In London, retailers know that this flow of people [are coming] and you try to have in store the products that are most appealing to them. If I am an Italian brand, I have to ensure that my shop in London is not out of crocodile moccasins, because I will sell more in this period than any other,” said Ortelli.

In addition to the pre-Ramadan rush, retailers are targeting Eid celebrations, which take place at the close of the holy month. “For us we see the real spike at Eid. Premier Tax Free are forecasting 50,000 visitors in July — this is when we really concentrate our efforts,” revealed Halliwell of Harvey Nichols.

Those efforts include placing Arabic-speaking staff on every floor of the store and flying in stylists from Harvey Nichols branches in the Middle East to train the London team on the nuances of catering to this audience. “As well as tailored in-store services, we partner with leading hotels to offer mutual clients exclusive access to collection previews and offer an easy, fuss-free courier service from our store to their hotel room,” added Halliwell.

In addition to hosting private shopping events and ensuring consumers are assisted by staff of the same gender, brands and retailers now provide transportation, in significant style, between their London doors. “Brands that have a concession at Harrods, which is a smaller site than the headquarters on Bond Street or Sloane Street, will try sometimes to move the customer to the flagship, where there is a bigger selection of [product],” said Ortelli.

This level of service is indicative of the increasing competition between retailers. “Our understanding is that the market is fairly saturated, even though there are slightly more coming over and there is that huge consumer spending power, it is more to do with the retailers trying to grab competitive share from each other,” said Clark.

This year, the Arabic spend in the period leading up to Ramadan is especially important to London retailers, due to a steep decline in Russian expenditure. According to Global Blue’s Clark, “for January to May 2015, the decline in Russian expenditure has been minus 44 percent of sales in store from Russia. It does put more emphasis on the Middle East and a lot more interest in the growth potential of Middle Eastern custom.”