How London can benefit from the Paris Olympics

Many Londoners recall the 2012 Olympic games fondly. Danny Boyle’s masterful opening ceremony and Team GB’s huge haul of gold medals certainly showed off the country well.

But for many London retailers August of 2012 was something of a nightmare. International visitor numbers were actually down by 5% year on year as the UK’s usual bout of summer visitors avoided the country, anticipating travel disruption thanks to the Games. Domestic shoppers also avoided the city thanks to worries about crowds. And the visitors that did come specifically for the games generally spent far less than regular visitors did.

This was not a huge surprise. Economists call this process “displacement” - basically when you get more visitors or spending from one area it can easily displace another area.

But why talk about this now, 12 years later? Because just over 200 miles across the Channel Paris is gearing up to host the Summer Olympics itself. And if the UK plays its cards right, it could benefit.

A Tale of Two Cities

Paris and London have far more in common than either city likes to admit. Both are based around fortifications surrounding a key river, have deep cultural legacies that are ingrained in the minds of tourists all around the world, and are hubs for tourists arriving from further afield.

This last point is especially true for London - a huge number of visitors from the Western Hemisphere come to London as a gateway to the rest of Europe.

This commonality could prove very advantageous to London this summer, as many tourists who might usually pick Paris as a natural destination look around for somewhere else to spend time. While many tourists would love to catch a glimpse of the Olympics, only a certain subset of them will be willing to put up with the congestion likely to occur around Paris. Even if this congestion ends up being extremely well-managed, the perception that the city will be unbearably busy and hotels temporarily increasing prices excessively, will be playing on the minds of those planning holidays.

London is of course not the only alternative to Paris for those visiting Europe this summer. But it does have a cultural legacy and plethora of transport infrastructure that smaller cities struggle to match - one that could pull some serious spend.

Seizing the surge

London retailers cannot simply sit and wait for tourists to come.

Those that do the best in travel retail allow visitors to feel comfortable while obtaining something “unique” to that location.

That comfort comes in many forms - perhaps it is simply the broad smile and talkative attitude most Americans expect from retailers. Maybe it is labeling in another language, or even better, staff who can speak in several languages to assist those for whom transacting in English is hard.

It can also come in payment methods. Chinese tourists are accustomed to paying for things with WeChat Pay. And tourists from all over the world, in particular the Middle East, prefer to transact in cash. This applies to everyone - from the shoestring traveler who prefers cash as a form of budgeting to the luxury tourist who values the privacy and security from identity theft that cash affords.

Balance that comfort with offering something uniquely British, something that means they see the item you are selling as not just another commodity, but as a memento of their time here.

Potential pitfalls

I would be remiss to not mention some problems UK retailers will face this summer alongside the potential upside.

The Paris Olympics may put off some tourists from Europe altogether, especially long-haul travelers who many only make one trip to Europe a decade, and are likely to want to see both Paris and London.

And those who do come will likely be savvy to the fact that other European centres like Milan and Madrid can offer them VAT refunds on their shopping, making big-ticket purchases far more attractive.

London retailers cannot do this thanks to the intransigence of our Government following Brexit. My company, Prosegur ChangeGroup, commissioned research earlier this year from the CEBR which showed this ‘Tourist Tax’ is costing the country up to £11.1b in lost GDP, but the prospects for getting rid of it any time soon seem dim.

So while the Olympics could be a fantastic opportunity for many retailers, we are still being held back. Hopefully the next time a European centre wins the Summer games - which will be 2036 at the earliest - we will have sorted this out.