Burberry’s CEO, Joshua Schulman, has recently sparked a critical conversation about the shopping landscape in the UK, urging the government to reconsider bringing back VAT-free shopping for international visitors. This initiative, abolished in 2021 post-Brexit, previously allowed overseas shoppers to reclaim 20% VAT on their purchases made in the UK.
Schulman expressed his concerns to *The Times*, pointing out that without this incentive, international shoppers are not flocking to the UK in the numbers that brands like Burberry hope for. He emphasized that reinstating VAT-free shopping could serve as a “real lever for growth,” presenting a golden opportunity for the UK to regain its status as Europe’s premier shopping destination.
The impact of this scheme’s removal is significant, especially for luxury brands and the larger retail sector. Currently, many UK retailers are struggling to keep pace with their European counterparts who continue to benefit from VAT-free shopping schemes. This puts British businesses at a competitive disadvantage in attracting tourists, who often factor in such perks when deciding where to shop.
Despite recent signs of a turnaround for Burberry, with retail revenues showing improvement and a decline in comparable store sales softening from 21% down to just 1%, the broader retail landscape in the UK remains fraught with challenges. Schulman joined Burberry last year with hopes of revitalizing the brand through a strategic plan he calls “Burberry Forward.” This initiative aims to resonate with younger luxury consumers and strengthen product categories like outerwear and scarves, dear to the Burberry identity.
Yet, even with these encouraging trends, Schulman acknowledges that the macroeconomic environment is still tough. He stated, “Although the external environment remains challenging and we are still in the early stages of our transformation, we are encouraged by the initial progress we are starting to see.”
Nevertheless, the UK government has not heeded calls to restore this VAT refund scheme, citing concerns about potential fiscal implications. A Treasury spokesperson reiterated that there are currently “no plans to introduce a new tax-free shopping scheme in Great Britain,” although efforts to boost tourism are underway through a forthcoming national visitor economy strategy.
The decision to scrap the VAT refund scheme has faced backlash from industry representatives. Groups such as Walpole, which represents the luxury sector, have labeled the government’s stance as “crazy” and “wrong-headed.” Many believe that reinstating the VAT refund would provide a crucial boost not just to luxury retail but to the high street and tourism at large.
As the conversation evolves, it’s clear that the potential to revitalize the UK’s shopping appeal hangs in the balance. Many in the retail sector are hopeful that with enough advocacy and public interest, the government might reconsider and act in favor of not just businesses but the broader economy that thrives on tourism and international trade.
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