Will retailers win gold during the Olympics?

Many retailers have extended their trading hours during the Olympics, in the hope of benefitting from the rush of tourists flocking to enjoy the events in London. At least, this is what many retailers hope for - considering the wash-out of the last few months, weak consumption levels and growing concerns surrounding the eurozone crisis, a boost would be most definitely welcomed.

Figures as revealed by the Centre for Retail Research do seem to support this optimistic view, estimating an increase in total spending due to the Olympics and the Diamond Jubilee to total £1,069 million which is definitely good news. However, a few good weeks doesn’t give UK retailers the all-clear. The net effect is pretty unclear as well as many would-be tourists would no doubt be staying away from travelling to London this summer because of the all this Olympics kerfuffle. It won’t only be London that’s affected either – it’s believed that other UK areas could see a downturn in their visitors as people choose to stay away from the UK altogether. So to weigh up the increase in spending relative to the costs (i.e. the opportunity cost of missing tourists who have avoided the games and the wages of the retail staff working extra hours) is rather more complex than it would seem at first glance. The Olympics’ impact on the UK economy remains to be seen...