August 8, 2022

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US tourists outpace Paris stores as euro drops

US tourists outpace Paris stores as euro drops

PARIS (Reuters) – US tourist Shauna Wilson said she wore four dresses at LVMH’s La Samaritaine department store in Paris, seduced by prices as the euro hit par with the US dollar.

The euro fell below $1 on Wednesday for the first time in two decades on concerns that higher energy prices caused by the conflict in Ukraine could push the European Union into a protracted economic crisis. Read more

“It looks like it’s for sale here,” said Wilson, 49, of Colorado, whose purchases included two dresses for her daughter. “Because the euro and the dollar are almost the same, that definitely encourages us to spend.”

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The weaker euro is a big draw for tourists, especially Americans – who were marked as a major growth driver for the European luxury goods sector in the second quarter, according to analysts from Barclays.

The strong dollar against the euro contributed to a fourfold increase in tourism spending in Europe in June compared to last year, with spending from Americans accelerating, UBS analysts said, citing data from value-added tax refund company Planet.

The luxury sector has recovered quickly from the pandemic as people scrambled to spend the money saved during the lockdowns – and buy food for themselves as social contact resumes.

But sales in China, the world’s largest market for luxury goods, have fallen this year as a new wave of strict coronavirus lockdowns shuttered stores, slashed demand and reduced the number of high-spending Chinese tourists in Europe. Read more

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So, as Americans fill up on transatlantic flights, their enthusiasm to take advantage of the weak euro is helping to make up for lost business as a result of the lack of Chinese visitors, who were the main source of luxury sales growth in Europe before the pandemic.

Luxury Goods Companies Richemont (CFR.S) On Friday, Burberry reported higher sales in Europe, which helped offset a more than 30% drop in China. Read more

It was France that benefited the most from the tourists’ boast.

UBS analysts said sales to tourists in France jumped in June to just 11.3 percent below 2019 levels, a positive sign for French luxury brands that have significant exposure to their home market.

American tourists have been thronging the Rue Montaigne in Paris this week, wandering the luxury boutiques, which feature designer names like Louis Vuitton, Chanel, and Gucci.

Cheryl Penn, 70, a realtor from Delray Beach, Florida, has already bought herself a skirt and stocked up on baby clothes for her granddaughter.

“We just hit the street, so we just started our shopping trip,” Ben said.

“I like that the euro and the dollar are the same, so I know exactly what I’m spending,” she said.

TikTok influencer Jennifer Groner took part in a shopping spree in Paris in April when the euro was under pressure against the dollar.

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“I’ve never seen anything like this in terms of price savings,” she told Reuters, estimating that she bought a Birkin bag from Hermès in Paris for $4,000 less than it would have cost in the United States, and paid just over. $9,000, thanks to a VAT refund.

“You can travel to Europe and enjoy the culture but at the same time you can buy a bag,” said Groner, who also bought handbags and accessories from Prada, Dior, Louis Vuitton and Chanel. US prices, based on their calculations.

Monica Arora, founder of pursebop.com, a news and information site for luxury brands, said she believes brands will eventually “coordinate” pricing.

“They’ve done it many times before,” she said.

Chanel told Reuters in May that it may carry out further price increases in July to take into account currency fluctuations – particularly a weak euro – and inflation. Read more

Paris’ appeal remains strong for American shoppers even though New York’s upscale shopping streets are teeming with European luxury brands.

said Jennifer Tombowski, outside the Gucci flagship store on Fifth Avenue in New York.

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(Additional reporting by Lea Quigg, Doinsola Oladipo, Gigi Zamora, and Mimosa Spencer.) Editing by Jane Merriman

Our criteria: Thomson Reuters Trust Principles.