‘Tis the season for holiday shopping—across the pond, apparently.
Back in summer, tons of well-heeled Americans headed to shopping capitals in Europe and the UK to take advantage of the sinking value of the euro and pound against the US dollar by snapping up luxury goods and real estate. Now with the holidays upon us, wealthy shoppers are again capitalizing on the dollar exchange rate.
Spending by American tourists in Europe grew more than 40 percent during the week of Black Friday compared with the same period in 2019, as reported by The Wall Street Journal. The amount of cash being spent was up, too, with the average transaction amount rising to $1,313 (€1,200) from $527 (€500) in 2019, according to data from payments company Planet.
There are a few reasons stateside shoppers are beelining it to the Old Continent. For one, the dollar and the euro are practically at parity. Furthermore, the majority of high-end wares are crafted in Europe and thus cheaper there than in the US. In fact, Americans are now paying an average of 38 percent more at home for luxury clothes and accessories than in Europe, according to a report published by Bank of America last month.
In addition, Europe currently offers tax-free shopping for American tourists which results in additional savings on purchases. The UK, on the other hand, scrapped tax-free shopping for international visitors after Brexit in January 2021. As a result, savvy US shoppers are choosing Paris and Milan over London.
These factors combined have resulted in a marked increase in US shoppers in Europe. A November report from analysts at Bain & Co. estimated that American spending on luxury goods in the region would be 2.3 times as high this year as in 2019. Americans also accounted for between 32 and 34 percent of global luxury spending this year compared to the 22 percent they accounted for in 2019.
Whether or not Europe remains a shopping mecca for Americans long term is unclear. The US economy is on the brink of an unpredictable 2023 that could see more people curb frivolous spending. The dollar has recently begun to weaken against the euro, too. For the minute, at least, the Champs-Élysées may be a better choice than Savile Row or Fifth Avenue.