When the pound goes down, the market goes up – That’s what is currently happening in the UK. Recently labeled as the world’s most economical ‘luxury’ products market, UK has shopping aficionados flocking from across the globe to steal the best deals.
The question is – will this status quo of the weak pound last long? Negative, say reports, and research. Deloitte analysis says this situation is the direct consequence of Britain voting to leave the EU this year in June, with vicissitudes in currency movements further contributing to the dip in pound values. However, the analysis also said that because of this current currency dip, UK visitors have managed to garner excellent value for themselves since Brexit.
How does this translate monetarily for shoppers? The same Deloitte report noted that a Louis Vuitton Speedy 30 handbag costs $ 802 (converted to local currency), for those buying in the UK – a significant price difference compared to the $ 970 cost in the US and the $1,115 price tag in China, for the same product. Similarly, a Balenciaga Foulard Fringe outfit came at a whopping $ 450 higher price in the US.
However, experts opine that the tides may turn in the coming six to twelve months as brands and designers will begin to understand and be able to handle these lower British prices.
Deloitte’s fashion and luxury lead in the UK, Nick Pope, said (to Sky News), that a few brands/designers have already begun applying price increases to lift their margins. This has been done in an effort to offset the 17% weakening in the rates of the pound against the dollar. Pope further highlighted the percentage fluctuations in prices as noted by Deloitte’s research: 84% unchanged, 12% increased and 4% decreased. Deloitte further suggests that this is the time for brands to figure out how to strike the right balance between appealing to domestic shoppers versus international/tourist shoppers.
In celebration of China’s national holiday Golden Week, a massive number of luxury shoppers from China flooded UK markets. Forecasts made by the top online travel agencies in China, Ctrip, highlighted that during the Golden Week this year, outbound tourism increased by 12%, representing a 10.7% growth compared to 2015. This proves that in the UK luxury market that is majorly (over 50%) driven by tourists, and in the UK tourism industry in general, China is showing huge potential in terms of offering the scale of growth, with visits have gone up 46% and spending up by 18% in the previous financial year.
[ Via : Wsj ]