News Analysis: Will shoppers return to London?

The terror bombings and rising travel costs have driven consumers away from the West End. James Quilter reports.

Consumers who once visited London's shops regularly may be thinking twice about the journey following the recent terror bombings. But central London retailers claim that, even before the bombs, rent rises, the congestion charge and the growth of out-of-town shopping centres had already been giving them cause for concern.

They say the efforts of the Mayor's Office and other organisations to coax customers back into London do not go far enough to stop a long-term decline in their fortunes.

Politicians' pleas to defy terrorism by carrying on as normal have fallen on many deaf ears. Since the bombings on 7 July, footfall and sales in central London have broken records - but the wrong sort. According to the London Retail Consortium (LRC), a subsidiary of the British Retail Consortium (BRC), like-for-like sales in central London are the worst on record. Sales in July fell by almost 9% on the previous year.

The office of Mayor Ken Livingstone and Visit London have a plan to get visitors back to central London. 'Everyone's London', unveiled last week, comprises a series of 100 events - including an Oxford Street Festival - backed by a campaign created by Publicis and Rainey Kelly Campbell Roalfe/Y&R.

Preparation of a Regent Street Festival on September 4 is also under way, with plans to cover the street with grass and trees to create a country garden and stage music performances.

BRC director general Kevin Hawkins dismisses the initiative as 'a PR stunt' and says his organisation was not consulted. He believes the expense of travelling into London needs to be tackled. 'If you want to improve footfall, you have to make access cheaper. Make a difference to people's pockets - the best way to do that is through transport. It's the only practical way forward.'

Just three days before the bombs, retailers were bracing themselves for the effects of the 60% increase in the congestion charge from £5 to £8.

Calls to Transport for London (TfL) to suspend the charge for six months after the bombings, to enable London's economy to recover, were ignored.

'If people wanted to come into London, but were nervous of using public transport, the congestion charge might make them not bother,' says Hawkins. 'The increase should have been put on hold, as should the congestion charge itself.'

Iain Renwick, chief executive of London retail stalwart Liberty, agrees. 'The events in July have been beyond our control. But what I find absolutely beyond the wit of men is that we have complete control over the congestion charge and they still make an increase at this time. It is absolute lunacy.'

Business frustration

Renwick says radical steps must be taken to improve the look of the West End, suggesting that consideration should be given to making Oxford Street pedestrian-only. 'There is anger in the business community at the folly that has been visited on us,' he says. 'We need to provide a rationale for people to go there.'

Renwick warns that shoppers will continue to go elsewhere if nothing improves, and the West End could end up like the east end of Oxford Street which critics argue has become tatty and littered with cheap tourist shops.

There are plans to improve things. The New West End Company was founded earlier this year to represent retailers in the area. Formed after the West End was designated a business development zone, it has an £18m budget, with which it will spend three years positioning the location as the UK's premier shopping destination (Marketing 10 August).

John Ross, Greater London Authority director of economic and business policy, says the development of the Crossrail project - which will run under Oxford Street - and the successful Olympic bid will result in 'substantial rejuvenation' of the area between 2008 and 2012. But he rates the pedestrianisation of Oxford Street unlikely.

Ross rejects retailers' calls for cheaper Tube and bus fares, along with dropping charges at certain times. 'Free travel is too expensive,' he says. 'It would cost millions every day and we could use our entire budget in a couple of days. What we need is a sustained marketing campaign throughout September and for the Christmas period.'

He also rejects calls to postpone the congestion charge increase, dismissing it as 'a silly political campaign'. He says the majority of consumers travel into London by Tube or bus, and cars make little difference to overall footfall.

Discount parking

However, Ross' comments are at odds with the Mayor's Office and Westminster Council. Both authorities have conceded that cars are essential to central London's economy, and are drawing up plans to offer discount parking of £8.50 a day in central London at weekends for those who do not want to use public transport.

It is too soon to say whether shopping centres and areas outside London will benefit from the current disruption, but it is believed that some will see shopping centres as the safer alternative.

Representatives of the Bluewater shopping centre outside London would not comment on whether it had made gains as a result of the blasts. Its acting general manager would only say: 'Bluewater has always operated high levels of security and benefits from having police on site.'

London may take some comfort from the experiences of Manchester in the aftermath of an IRA bomb attack on its city centre in 1996.

The area suffered substantial damage and loss of life, but was revitalised as a result. The Arndale shopping centre was expanded, and the majority of stores returned, along with new arrivals such as Selfridges. A rolling refurbishment programme aims to maintain design standards and a further £150m expansion of the shopping centre has been proposed.

London retailers must now hope that similar measures will return consumer confidence to the capital.

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