Brexit tax refund hangover is a painful game-changer for Burberry
The chairman of London-based leathergoods brand Burberry, Gerry Murphy, has joined a number of high-profile figures who are calling for the UK government to restore tax-free shopping for tourists.
Refunds of sales tax for shoppers from overseas ended after the UK definitively left the European Union (EU) at the start of 2021; an EU-wide policy of allowing shoppers from other parts of the world to claim back sales tax no longer applied in the UK from that point on.
As a result, Mr Murphy said the UK had become “the least attractive shopping destination in Europe for non-European customers”, and he said internal data that Burberry has compiled proves this.
He told BBC radio that sales to US customers in Burberry’s stores in London and other parts of the UK had now recovered to reach pre-pandemic levels again. However, over the same timeframe, its sales to US visitors to Burberry stores in Paris have doubled.
Shoppers from the Middle East are now spending two or three times more in Burberry’s stores in Paris than they are in the company’s outlets in the UK, he added.
“We are seeing very graphic evidence of business being diverted from the UK to our continental neighbours as a direct consequence of making Britain much less attractive,” Mr Murphy said.
He explained that the company already knew from observing consumer attitudes in popular tourist destinations in Asia where it has stores, such as Hong Kong, Singapore and Bangkok, that a move of 3% or 4% in exchange rates is enough to change shopping behaviour.
If 3% or 4% is enough to make shoppers alter their behaviour, he argued, the 20% that customers in the UK are now being asked to pay because there is no tax refund is proving to be a game-changer.
Image: Burberry.
