Royal wedding gives economic stimulus

It is estimated that over two billion people watched last Friday's royal wedding. That is one-third of the world's estimated population and twice the number of people who watched the opening ceremony of the Beijing Olympics.

The day was declared a state holiday in the UK and the fact it was followed by the May Day holiday implied it was a long weekend of merriment. However, as is the case with most weddings, little thought is given to the economics behind the event.

Any event such as a royal wedding has extremely important economic implications for small and medium enterprises (SMEs), which in the UK, accounts for 59.4 per cent of private sector employment and 50.1 per cent of private sector turnover.

The wedding was certainly a boost for some sectors of the economy such as the memorabilia, retailing, hospitality and tourism industries. Estimates show approximately half a million people travelled from across the UK to see it.

Estimates

These short term visitors to the capital are estimated by the accountancy firm PWC to have increased retail sales in London by £107 million (Dh655 million). In addition, the capital was expecting a further 600,000 visitors from overseas along with the hundreds of media crews.

This certainly helped the tourism and hospitality sectors in the UK at a time when the economy is not doing so well. The memorabilia industry has been busy cashing in since Prince William and Kate Middleton announced their engagement last year.

In the run up to the wedding, it is estimated nearly £200 million was spent on china plates, coins, jigsaws, etc. Interestingly, approximately a quarter of this figure is estimated to have been spent with on-line retailers.

Overall it is estimated the royal wedding will add approximately £1 billion to sales of these three sectors. With such a high coverage of the business space in the country, is assumed that the lion's share of the additional revenues will be earned by SMEs.

Such one-off events are an ideal opportunity for SMEs to increase sales, even carry out product development so as to enhance their existing portfolio or test new products. Although the winners tend to be the usual suspects such as the memorabilia, retailing and hospitality industries, it should not stop others from also cashing in on the occasion.

It allows SMEs to be innovative in their marketing and advertising without the liability of a huge expense bill. For instance, a group of Australian wool growers contributed handfuls, which were made into material for suits and given to Prince William as a wedding present. This low cost, but innovative, idea highlighted the quality and capabilities of the firms in the global markets.

One-off events certainly do offer opportunities, but also have risks attached to them. For instance, the SME needs to appreciate the impact of attaching itself to a particular one-off event on its brand image.

As interesting or effective as using a one-off event may be, the owner needs to understand they need to be true to their brand. The incentive of increasing a short revenue stream should not detract from its core motivation and way of doing business. Companies need to be consistent in their activities and marketing messages and consider the sensibilities of customers.

The writer is the head of export market intelligence at Dubai Exports, an agency of the Dubai Economic Department.