The sour truth of Oxford Street’s candy shop curse

It is Friday afternoon and Oxford Street is thronging with tourists walking down the world’s most famous shopping promenade as Londoners spill out of pubs.

Little did the tourists expect when they came here that so many of the stores would be weird American-style candy and souvenir shops. And little do they know that behind the gaudy exteriors, activities like the sale of illegal goods and money laundering are taking place. Authorities are finally cracking down on this criminality, as well as many millions in unpaid business rates, but how did the West End turn into the Wild West for all these cowboys?

When the Standard visited these Oxford Street shops to ask their owners some serious questions, we were stonewalled by staff clearly trained not to provide any information. At one sweet shop a worker told us: “I’ll call my boss. When he comes, I can give him your business card. He’s not in today. He’ll maybe return tomorrow. I’ve just started so I’m only in charge today.”

A few doors down at a souvenir shop, an employee said: “The boss is not here. He’s coming in maybe one or two weeks. He doesn’t come every day, just one or two hours then he’s going back. He’s doesn’t have any timetable.” This first line of defence is a blandly frustrating tactic that belies a situation at breaking point. Earlier this month the head of Westminster council called on the National Crime Agency to crack down on these shops, and their rap sheet is long and telling: trading standards have seized more than £1 million of counterfeit goods including fake Rolex watches and Apple products, along with super-strength vapes with illegal amounts of nicotine.

Westminster also say the businesses — with their tacky multi-coloured shop fronts — are a hub for global money laundering, with many set up by people with opaque shell companies. Increasing numbers of the shops have been registered in Jersey and Russia to wash the proceeds of drugs, guns, people trafficking and prostitution. Many of these shops in Europe’s busiest retail precinct owe unpaid business rates, totalling nearly £9.2 million, to the local authority, which collects the sums for central government. To put that total in perspective, it would fund the annual salaries of nearly 450 newly qualified nurses or about 270 police recruits.

Contact details were left at all the businesses but we only received a response from Kingdom of Sweets, one of the few legitimate businesses in the area. Their CEO Chase Manders said he welcomed a crackdown, explaining how “cowboys” in the industry had damaged sales at his reputable firm.

“We are a respectable business paying all relevant taxes and business rates,” he said, “The issue of these cowboy operators opening and then closing without paying business rates or any other taxes has had a detrimental impact on our trading in an extremely difficult environment. Sales have been hit by as much as 80 per cent in central London.

“As a responsible business we support plans to clamp down on this practice and will continue working with Westminster council. We also support a wider discussion to find a solution to the woes of the retail sector, which has sparked these illegal operations. An urgent coordinated strategy is required. We are determined to be at the heart of finding a way forward which works for all.”

Later the same week the Standard took a tour of Oxford Street with councillor Geoff Barraclough, who is in charge of planning and economic development. He took us past the worst offender, which owes business rates to the tune of £1.5 million. A short distance away were the other shops in the top five offenders which have deprived the public purse of £224,000, £147,000, £111,000 and £84,000.

As quickly as the council begins enforcement action, owners shut up shop and are replaced by similar businesses registered at Companies House under bogus names of directors. Clearly frustrated, Mr Barraclough told us: “It’s ridiculous you can start a company with less admin than getting a library card in Westminster. It reflects badly when people get away without paying their taxes. We’re playing whack-a-mole.”

He said stores began springing up in 2017, as shopping shifted online and household names disappeared from Oxford Street, starting with the closure of Philip Green’s British Home Stores in August 2016. When flagship buildings were left empty, landlords gave them over to the candy stores. The idea was the gaudy shops would move in for free as long as they paid the business rates, which in many cases never happened.

The number of candy outlets grew steadily and then shot up 500 per cent during Covid, taking over premises previously occupied by stalwarts such as Next, The Body Shop, Forever 21, Topshop and Dorothy Perkins.

Mr Barraclough points to a foreign currency terminal in one branch to explain how “dirty money” can be deposited and sent around the globe within minutes to hide its origin. He says: “The candy shops are the visible part of this dirty money. A lot of it is happening below the surface. The directors are often fictitious, they just make up someone. There’s no checks at Companies House.” However, Mr Barraclough told us the tide is turning: “The good news is we have managed to reduce their numbers by taking a tough line over the past 16 months.”

More than £250,000 in unpaid business rates has been recovered in recent weeks, and Westminster’s leader Adam Hug told a meeting on May 3 that the Government must give more support to HMRC and the NCA to investigate the overseas ownership structures of companies running the stores.

In the latest swoop, trading standards and police targeted two shops and confiscated over 7,000 items worth £145,000, including unsafe charging leads. Nearly 4,000 e-cigarettes with double the UK limit of nicotine were also seized. The brightly coloured vaping pens, sold alongside candy with sweet flavours to appeal to children, had been hidden from officers in five suitcases displayed on the shop floor.

In another positive sign, the HMV that was converted into a US-themed store in 2019 is due to reopen as a music shop again in time for Christmas, under plans announced last month.

There has been a major new development underpinning the change: the opening of the Elizabeth line has brought 62 million passengers to the West End, with the average visitor spending more than two hours there, up 23 per cent since 2019. The transport link near Tottenham Court Road puts one million extra people within 45 minutes of Oxford Street, and footfall is up a third in its first 12 months.

Dee Corsi, chief executive of business group New West End Company, says positive things are happening: “We acknowledge that however many [candy stores] there are, they are not part of the future vision of Oxford Street. Unprecedented funding over the next five years will diversify the district’s offerings and cement its place as the world’s leading cultural, retail and leisure hub.”

There are plans for wider pavements, more trees, seating and cafes. A full pedestrianisation was ruled out, but Ms Corsi says about three million square feet of retail and office space is either in the pipeline or under construction.

Ten core developments will provide modern retail, food and leisure. The old Debenhams and House of Fraser stores are to be turned into offices and gyms in post-pandemic Oxford Street, and Selfridges has already added more restaurant and food hall space.

Already open are the digital exhibition space Outernet, the Twist Museum and the adventure-themed Boom Battle Bar. Flagship Primark, H&M, Flannels X and Uniqlo stores will be joined by IKEA at Oxford Circus and a huge two-storey Footasylum before the end of the year.

Back on Oxford Street, when asked if the candy stores had been the area’s “death knell”, Mr Barraclough retorted: “Well just look at it? At midday, the place is crammed with people. There’s huge demand for commercial property. All the world’s best brands want to locate here. This is Europe’s high street.

“The thing we learned in Covid was how interlinked all the economic sectors are — retail, hospitality, leisure, culture. They all feed off each other. People don’t just come here to shop. It’s an ecosystem. If one leg falls away, the others are in trouble.”