American tourist Shawna Wilson says she has spent money on four dresses at the LVMH-owned La Samaritaine department store in Paris, tempted by prices as the euro hit parity with the US dollar.
The euro fell below $1 on Wednesday for the first time in two decades on fears that rising energy prices sparked by the Ukraine conflict could push the European Union into a protracted economic crisis.
“It’s like it’s on sale here,” said Wilson, 49, of Colorado, whose purchases included two dresses for her daughter. “Because the euro and the dollar are almost equal, it definitely encourages us to spend.”
Stories only for subscribers
The weak euro is a big draw for tourists, particularly Americans, who are being tipped as a key growth driver for Europe’s luxury goods sector in the second quarter, according to Barclays analysts.
The dollar’s strength against the euro helped tourism spending in Europe quadruple in June compared with last year, with spending by Americans accelerating, UBS analysts said, citing data from VAT refund provider Planet.
The luxury sector has bounced back quickly from the pandemic as people rushed to spend money saved during lockdowns, buying themselves treats as socializing resumed.
But sales in China, the world’s biggest luxury goods market, have plunged this year as a new wave of strict COVID-19 the lockdowns shuttered shops, reduced demand and also meant fewer big-spending Chinese tourists in Europe.
So as Americans pack transatlantic flights, their eagerness to capitalize on the weak euro is helping to replace business lost as a result of a lack of Chinese visitors, which were the main source of luxury sales growth. in Europe before the pandemic.
Luxury goods companies Richemont and Burberry reported higher sales in Europe on Friday, helping to offset a drop of more than 30% in China.
France has benefited most from the splurge of tourists.
Sales to tourists in France in June rose to just 11.3% below 2019 levels, a positive sign for French luxury brands that have large exposure to their home market, UBS analysts said.
American tourists thronged Paris’ avenue Montaigne this week, browsing the 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 herself a skirt and stocked up on baby clothes for her granddaughter.
“We just got to Avenue so we started our shopping spree,” Penn said.
“I like the euro and the dollar to be equal, so I know exactly what I’m spending,” he said.
Jennifer Groner, a TikTok influencer, went shopping in Paris in April when the euro was under pressure against the dollar.
“I’ve never seen anything like this in terms of price savings,” he told Reuters, estimating that he bought a Birkin bag from Hermes in Paris for $4,000 less than it would have cost him in the United States, paying little more. $9,000, thanks also to the VAT refund.
“You can travel to Europe, enjoy the culture but at the same time buy a bag,” said Groner, who also bought bags and accessories from Prada, Dior, Louis Vuitton and Chanel, saving a total of $8,000 compared to US prices. UU., according to their calculations.
Monika Arora, founder of Pursebop.com, a news and information website for luxury brands, said she believes brands will eventually “harmonize” prices.
“They have done it many times before,” he said.
Chanel told Reuters in May that it may implement further price increases in July to account for currency fluctuations, particularly the weakness of the euro, and inflation.
The pull of Paris remains strong for American shoppers even though New York’s high-end shopping streets are lined with luxury European designer brands. “A lot of my friends more than ever are taking little weekend trips to Paris and other places and they’re shopping while they’re there, because that’s what you do while you’re in Paris,” said Jennifer Tumpowski, outside the flagship store of Gucci on Fifth Avenue in New York.