American tourist Shawna Wilson says she bought four dresses at La Samaritaine department store in Parisowned by LVMH, tempted by prices after the euro reached parity with American dollar.
The euro fell below 1 dollar on Wednesday for the first time in two decades, on fears that the rise in energy prices caused by the Ukraine conflict could lead the European Union (EU) into a protracted economic crisis.
“It’s like they’re on sale here”said Wilson, 49, of Colorado, whose purchases included two dresses for her daughter. “Since the euro and the dollar are more or less the same, it definitely encourages us to spend.”
The weak euro is a big draw for tourists, especially Americans, who are being singled out as a key driver of growth in Europe’s luxury sector in the second quarter, according to analysts at Barclays.
The dollar’s strength against the euro helped Europe’s tourist spending quadruple in June compared with a year ago, with spending by Americans accelerating, analysts at UBS said, citing data from the data provider. Planet VAT refunds.
The luxury sector has quickly rebounded from the pandemic, as people rushed to spend money saved during lockdowns, shopping for treats as social life resumed.
However, sales in China, the world’s biggest luxury goods market, have slumped this year as a new wave of strict lockdowns over the COVID-19reduced demand and also meant fewer Chinese tourists in Europe.
Thus, Americans who fill transatlantic flights, in their eagerness to take advantage of the weak euro, are helping to replace the business lost by the lack of Chinese visitors, who were the main source of luxury sales growth in Europe before the pandemic.
Luxury goods companies Richemont and Burberry reported rising sales in Europe on Friday, which helped offset a more than 30% drop in China.
France is the country that has benefited most from the splurge of tourists.
Sales to tourists in France in June rose just 11.3% below 2019 levels, a positive sign for French luxury brands that have heavy exposure to their home market, UBS analysts said.
American tourists thronged Paris’s Avenue Montaigne this week, browsing luxury boutiques, which include designer names such as Louis Vuitton, Chanel and Gucci.
Cheryl Penn, 70, a real estate agent from Delray Beach, Florida, had already bought a skirt and stocked up on baby clothes for her granddaughter.
“We just got to the Avenue, so we just started our shopping spree. I like that the euro and the dollar are the same, so I know exactly what I am spending”said Penn.
Jennifer Groner, a TikTok influencer, went shopping in Paris in April, when the euro was under pressure against the dollar.
“I have never seen anything like this in terms of price savings”he said, estimating that he picked up a Hermes Birkin bag in Paris for $4,000 less than it would have cost him in the United States, paying just over $9,000, thanks also to a VAT refund.
“You can travel to Europe, get to know the culture and at the same time buy a bag”said Groner, who also bought handbags and accessories from Prada, Dior, Louis Vuitton and Chanel, for a total savings of $8,000 compared to U.S. prices, according to her calculations.
Monika Arora, founder of pursebop.com, a luxury brand news and information website, said she believes brands will end “harmonizing” prices. “They have already done it many times”he indicated.
Chanel said in May that it could apply further price hikes in July to take into account currency fluctuations – particularly a weak euro – and inflation.
Paris’s pull remains strong for American shoppers, even though New York’s high-end shopping streets are packed with luxury European designer labels.
“A lot of my friends, more than ever, take little weekend trips to Paris and other places, and shop while they’re there, because that’s what you do when you’re in Paris.”said Jennifer Tumpowski, as she exited the Gucci flagship store on Fifth Avenue in New York.