LONDON – 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 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 this week 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 said, gazing through the Burberry window shops 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 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., said 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 told the BBC. “In some cases it’s been five bags and six bags.”
The U.K. is currently the cheapest place to buy luxury goods, with 64 per cent of products selling for less in Britain than in the U.S., 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 iconic LV monogram, sells for the equivalent of $837 in the U.K. and $1,117 in China, Deloitte found.
And wanna be shoppers – particularly those from the Far East – are rushing to London before retailers adjust prices to offset the pound’s decline. 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 U.K. brands, like the boutique aspect of London shops but are also 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,” said 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 had been 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 said.
Burberry said this week that sales at British shops open for at least a year rose more than 30 per cent in the three months to Sept. 30. Bag sales were particularly strong, especially those of the equestrian inspired Bridle Bag. Though on sale in Britain, it is not yet widely available globally, Couttigane said.
“We’re seeing that spike in interest of people who can’t buy the Bridle Bags in their home markets but they really want to get hold of it,” Couttigane said.
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 jewelers that made Princess Diana’s famous engagement ring _ said 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 said. “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.”
Luxury shoppers love that bit of cache. So if you can show off that label, or demonstrate a connection to royalty, so much the better. And better yet, they like something to put the haul into.
“Chinese people love handbags” Chang said.