American tourist Shawna Wilson says she bought four dresses at the high-end LVMH-owned store La Samaritaine in Paris. She was attracted by the prices when the euro reached parity with the U.S. dollar.
On Wednesday, the euro fell over $1, which hadn’t happened in 20 years. This happened because people were worried that rising energy costs caused by the conflict in Ukraine could push the European Union into a delayed financial emergency.
Wilson, 49, from Colorado, said, “It looks like it’s on sale here.” She bought two dresses for her little girl. “Since the euro and the dollar are about the same thing, this makes us want to spend.”
The weak euro is a big draw for tourists, especially Americans, who are seen by Barclays analysts as a key growth driver for the European luxury goods market in the next quarter.
Examiners at UBS, citing data from VAT discount provider Planet, said that the strong dollar against the euro led to a four-fold increase in travel industry spending in Europe in June compared to the same month last year, with spending from Americans going up quickly.
The high-end area quickly got back on its feet after the pandemic, as people rushed to spend the money they had saved during lockdowns on treats while people were still getting together.
But sales in China, which is the world’s biggest market for luxury goods, have dropped this year because of a new wave of severe COVID-19 lockdowns that closed shops, cut orders, and meant fewer high-spending Chinese tourists in Europe.
So, as Americans take more transoceanic flights, their eagerness to take advantage of the weak euro is helping to make up for business lost because of the lack of Chinese visitors, who were the main source of growth in luxury deals in Europe before the pandemic.
Richemont (CFR.S) and Burberry reported higher sales in Europe on Friday, helping to offset a more than 30 percent drop in sales in China.
France has gotten the most money from tourists’ big spending.
UBS experts say that the fact that deals to tourists in France in June were only 11.3% below 2019 levels is a good sign for French luxury brands that are very open to their home market.
This week, a lot of American tourists went to the Avenue Montaigne in Paris to look at the high-end stores, such as Louis Vuitton, Chanel, and Gucci.
Cheryl Penn, a realtor from Delray Beach, Florida, is 70 years old. She had already bought herself a skirt and bought a lot of clothes for her granddaughter.
“We just got to the Avenue, so we started our shopping spree right away,” Penn said.
She said, “I like that the euro and the dollar are equal, so I know exactly what I’m spending.”
Jennifer Groner, an influential American on TikTok, went shopping a lot in Paris in April, when the euro was weak against the dollar.
She told a well-known website, “I’ve never seen anything like this in terms of price reserves.” She said that she bought a Birkin bag from Hermes in Paris for $4,000 less than it would have cost her in the U.S., paying just over $9,000, because of a VAT discount.
“You can go to Europe, learn about the culture, and still buy a pack,” said Groner, who also bought purses and accessories from Prada, Dior, Louis Vuitton, and Chanel, saving an estimated $8,000 compared to U.S. prices.
The founder of pursebop.com, a news and data site for luxury brands, Monika Arora, said that she knows the brands will eventually “orchestrate” costs.
She said, “They’ve done that a lot of times before.”
Chanel told a well-known website in May that it might raise prices again in July to reflect changes in money, especially the shortfall of the euro, and growth.
Even though New York’s high-end shopping streets are full of expensive European designer brands, Paris still has a strong pull on American shoppers.
Jennifer Tumpowski said, outside of Gucci’s flagship store on New York’s Fifth Avenue, “I’ve never seen so many of my friends take little weekend trips to Paris and other places, and they shop while they’re there, because that’s what you do when you’re not kidding.”
