Originally published on Barclays Corporate Banking: Insight and Research in June 2014
Expenditure from domestic and overseas tourists is forecast to reach over £135bn in the UK by 2017. Is your business ready to take advantage?
“The Olympics really showcased the UK, and London in particular,” explains Richard Lowe, Head of Retail and Wholesale, Corporate Banking, Barclays. “Now the capital is benefitting from an increase in tourism, because people saw what a great Games it was and what a fantastic city London is.”
Overseas tourism to the rest of the UK is forecast to rocket too. A new report produced by Barclays, titled UK Tourism Dynamics, finds that while London’s expenditure from overseas tourists is set to increase 36% by 2017, Scotland, Yorkshire and Wales are also due a substantial uplift.
Thanks to the Visit Scotland marketing campaign and the organisation’s investment, Scotland is set for a “spectacular” 39.8% growth in spending from international tourists by 2017 – taking total overseas tourist spending in the country to nearly £2.3bn. The Glasgow 2014 Commonwealth Games, taking place in July and August, are sure to help Scotland hit this forecast.
What this means for your business
“Businesses can capitalise on these uplifts in tourism by understanding who the overseas visitors are and where they’re coming from,” says Lowe. Then they can ask themselves: “What is it we can do bespoke for these tourists?”
Once the holiday makers and day-trippers have gone back home, UK businesses can continue to benefit. “When people travel to the UK, it’s not just about them buying products over here – they connect with the brand when they go back home too,” says Lowe.
“Through the internet, businesses can continue to stay in touch with new customers directly – who can keep making purchases. That way a business builds its reputation overseas.” Richard Lowe, Corporate Banking, Barclays
Driving your exports
Building reputations overseas to drive exports is a big focus for the government – and for the business community. Writing in Securing Britain’s Growth, John Winter, CEO of Corporate Banking at Barclays, points out:
“On average, 25% of EU SMEs are involved in exports, whereas in the UK it is only 20%. The government is being extremely pragmatic in its vision for 100,000 more SMEs to join the ranks of exporters. Such an increase in exporters has the potential to eliminate the UK’s trade deficit and add £30bn to the GDP, something that will benefit everyone in the UK.”
British brands like Burberry and Barbour have cracked specific foreign markets with what Barclays’ Richard Lowe describes as a powerful “heritage and history”. “In Germany, Barbour is a very strong brand – and it’s also quite strong in the US. So it’s about going to a particular country, building out and growing larger.”
Alongside historical brands, Lowe points out that newer, online retailers such as ASOS and Chain Reaction are also conquering new markets.
Foreign direct investment (FDI) and how it can help your business
As UK retailers grow their sales overseas, foreign brands like Zara, Forever 21 and Uniqlo are providing employment opportunities across the UK. In fact, UK Trade & Investment’s research shows that Britain is the leading European destination for FDI, with 59,153 new jobs created between 2012 and 2013.
Topping the list of investment in the UK are the software and computer services sectors, with financial and business services also excelling. Lowe outlines the benefits of FDI: “It’s about growth – UK Businesses have an opportunity to benefit along the supply chain too as the foreign investment comes in – allowing your business to potentially grow faster than it might have done otherwise, and it can also help better open up international markets.”
Finding help for your business
With domestic and overseas tourist expenditure on retail goods expected to reach an impressive £24.9bn by 2017 (UK Tourism Dynamics report), Barclays is determined to help British businesses prepare for potential new income streams.
“We work with clients and look at what their strategy is, what the business rationale is, and what they are seeking to achieve. Once we have an understanding of that, we can work with them regarding their working capital cycle and the facilities they need to support their levels of growth.” Richard Lowe
There’s certainly no one-size-fits-all approach. “Each corporate client works with a Barclays specialist,” explains Lowe. “Because for us it’s about understanding the clients business holistically – only that way can we really provide support from a bespoke basis.”
Produced in partnership with Barclays