Luxury goods now cheaper in London than anywhere else
According to research from Deloitte luxury goods now cost less in Britain in dollar terms than anywhere else. It linked the trend to the fall in sterling since the Brexit vote, which has boosted tourists’ spending power. The pound has fallen more than 17% against the dollar since June.
According to the research, which was prepared for the Wall Street Journal, a Speedy 30 handbag from Louis Vuitton cost £645 in London as of 7 October, or $802. That compared to €760 ($850) in Paris and $970 in New York. In China the bag cost 7,450 yuan, or $1,115.
Nick Pope, fashion and luxury lead at Deloitte, told the BBC a “period of affordability” after the EU referendum vote was proving a “demand pull” for tourists, who account for more than half of the UK’s luxury goods market
“The trend in luxury pricing in the UK is being driven mainly by the depression on the sterling – thus making the same item more affordable in the UK market than in any other major luxury market,” he said. “People don’t like paying more for the same product.”
That chimes with official statistics that show overseas residents made 3.8 million visits to the UK in July - up 2% on the same month last year. In total, they spent some £2.5bn.
Myf Ryan, chief marketing officer at shopping mall operator Westfield, told the BBC: “The number of tourist shoppers at Westfield centres in July increased year on year with average international spend up nearly 70%.”
“What we have seen is Chinese tourists bulk-buying designer items,” she added. In August, Chinese spending at Westfield’s malls was up 53% compared with August 2015, she said.
The fall in sterling has pushed up the price of some everyday goods, but Deloitte said luxury retailers had kept prices stable for fear of scaring off consumers. It said 64% of comparable luxury products were now cheaper in the UK than anywhere else.
Other examples include Balenciaga’s Foulard Fringe Dress, which currently costs about $400 less in the UK than in the US. A Brunello Cucinelli cashmere v-neck for men, meanwhile, costs £650, or $843, in Britain compared to $942 in France and $995 in the US.
Mr Pope warned the discounts would not necessarily last, however, adding that a small number of brands had already put prices up.
“Luxury brands are usually – and rightly – cautious about en masse pricing adjustments,” he said. “But if over six to 12 months this sterling position becomes the ‘new normal’ – and hence margins are under continued pressure – I would expect more brands to respond with pricing adjustments.”
adapted from the BBC