Would you travel halfway around the world for a handbag, or a coat? Maybe if you really loved it – and could get 20 per cent off.
At the moment, the price is right in Britain, where the decision to leave the European Union has led to a sharp drop in the value of the pound. That’s proving a bonanza for luxury goods shoppers with foreign currency to spend.
Amy Chang, a 30-year-old from China, snagged a Burberry trench coat while visiting London for her sister’s graduation.
“I’ve had my eye on it for a long time and I’ve always thought it was too expensive,” she says, gazing through the Burberry window in New Bond Street, the heart of high-end shopping in London. “But now, coming to Britain, it’s actually much cheaper than in China, so I finally bought it.”
The pound has lost almost a fifth of its value against the US dollar since the June 23 referendum on EU membership because of uncertainty about Britain’s economic prospects. That means tourist dollars go farther, and visitors are rushing to buy before retailers jack up their prices.
Julie Deane, founder of the Cambridge Satchel Co, says the bargains have had a “massive effect” on tourist spending.
“They come and check out the exchange rate and what it’s going to cost them and often that will mean that they go ahead and put a second bag in,” she says. “In some cases it’s been five or six bags.”
The UK is currently the cheapest place to buy luxury goods, with 64 per cent of products selling for less in Britain than in the US, China and France, according to a survey by the professional services firm Deloitte.
For example, the Louis Vuitton Speedy 30, a canvas handbag emblazoned with the LV monogram, sells for the equivalent of US$837 in the UK and US$1,117 in China.
Visit Britain, the national tourism agency, says flight-reservation data shows bookings from China to Britain are up 24 per cent for the last three months of the year compared with the same period in 2015.
Chinese visitors, many of whom are interested in the craftsmanship and authenticity of UK brands, like the boutique aspect of London shops and are attracted to the new outlet areas such as Hackney Walk in London and Bicester Village in Oxfordshire.
“The luxury market is one of the most competitive – if not the most competitive in the world,” says Anusha Couttigane, an analyst at Kantar Retail. “The fact that the pound has seen such massive devaluation has made retail a far more attractive market for consumers who were priced out of the market previously. It’s created a boon, a much needed boon, for British businesses.”
In addition, many products that are available in Britain haven’t been shipped out internationally yet, adding style tourists to the mix of those just interested in a bargain, Couttigane says.
Burberry said this week that sales at British shops open for at least a year rose more than 30 per cent in the past three months. Bag sales were particularly strong, especially those of the equestrian inspired Bridle Bag. Although on sale in Britain, it is not yet widely available globally, Couttigane says.
“We’re seeing that spike in interest of people who can’t buy Bridle Bags in their home markets but they really want to get hold of it,” Couttigane says.
And it’s not just bags. Perfume, clothes and cosmetics are also big on tourist shopping lists, according to a survey by the consumer research group Mintel.
Joanne Milner, chief executive of Garrard – the jewellers that made Princess Diana’s famous engagement ring – says the number of Chinese shoppers visiting its website has grown by 75 per cent since the Brexit vote. The firm’s shop at Harrods has seen a 1,000 per cent increase.
“It’s not just Garrard that is seeing it, it is London as a whole,” Milner says. “The thought is that in the long-term it will be good for British business, particularly London being the destination in Europe for luxury – whereas in the past it has vied with Paris for that position.”