Harrods replaces expensive bags with cheaper counterparts in airport stores

Harrods has been forced to replace its expensive bags at airport stores with cheaper counterparts

Harrods has replaced some of its most expensive bags with versions beyond £250 in airport shops as he blamed Rishi Sunak's tourist tax for deterring wealthy overseas shoppers.

Michael Ward, Managing Director of Harrods, said he was forced to «change the entire pricing architecture» at his airport stores due to a sharp reduction in tourist spending.

The luxury department store is now focused on selling a variety of bathrobes and beachwear at the Heathrow and Gatwick concessions, with most items under £250.

This represents a significant departure from the ranges previously sold at luxury retailers at airports, which included luxury handbags worth thousands of pounds.

Mr Ward said: «We used to be able to sell a bag for £1,000-£1,500 and people saved up the money and said, 'I'll take this bag and buy it in the store.' airport because I can get £200 or £300 tax back.”

This follows the government's decision to cancel VAT-free purchases for tourists visiting the UK following the UK's exit from the EU. Many retailers have described the move as an «own goal», saying shoppers have abandoned London and are now visiting Paris and Milan to shop for luxury handbags and jewelry. Travelers can still claim VAT refunds on their luxury purchases if they shop within the European Union.

Luxury goods retailers including Mulberry and Rolex closed their Heathrow stores after moving, and Heathrow warned earlier this year that it was struggling to fill empty spaces.

Harrods Managing Director Michael Ward said trade was impacted by the loss of the ability to shop without VAT. Photo: REUTERS/Henry Nicholls to get worse.”

He added: «People have forgotten that [duty-free shopping in the UK] is gone and in fact they are quite shocked when they go to buy them at the airport and they are not closing the deal.

«[Customers think]: “Why are you now waiting to buy this product at the airport? It will just give you something else to carry on the plane.»

The government says duty-free shopping is available to all non-UK visitors «who buy items from the store and have them shipped directly to their overseas address».

In response to criticism earlier this year, a government spokesman said: “Extending the scheme to EU citizens could cost UK taxpayers around £1.4bn a year, meaning that taxes would need to increase to pay for it at a time when we has already made difficult decisions to reduce debt.”

Mr Sunak on Wednesday poured hopes that the tax measures would be repealed, saying that central London would benefit most of the tax relief.

Mr Ward said Harrods is still investing heavily in its Knightsbridge in London. However, in reports released Thursday, Harrods said its revenue has yet to return to pre-pandemic levels in its latest fiscal year.

Revenue for the year ending January 2023 was £994m compared to £1bn for the year ending January 2020. However, compared to last year, when Harrods made £654 million in revenue, this is more than last year.

Tourism is lagging behind. Behind

Mr Ward said trade was partly impacted by the loss of VAT-free purchases in the UK. He added that Harrods is fighting to keep travelers from traveling elsewhere by pushing brands to launch products exclusively in their stores.

While tourists are starting to return, the Harrods boss said he does not expect Chinese travelers to return to the UK at the same level.

He said those buyers are «extremely price sensitive» as Paris needs to be «a real beneficiary» of those tourists who are traveling again and spending money on luxury in Europe.

Some luxury goods stores have suggested using other methods to attract wealthy travelers back to the UK. Last month, Burberry offered to offer vouchers to wealthy shoppers to compensate them for the loss of duty-free shopping.

However, Mr Ward said: “I don't see why we're complicating things by trying to develop a unique UK-specific system when the rest of the world has one that works.

He said more attention should be paid to the disruptive effect that fewer tourists would have in the UK.

Mr Ward added: “We should almost stop talking about how much shopping is going abroad and more about how much the hospitality sector is actually losing, how many fewer people go to our museums? »