The fall in the value of the pound following Britain’s decision to step out of the European Union may be having a positive effect on the luxury goods market in the country as the reduced costs of these essentially expensive commodities is going a long way in attracting tourists.
Since the June Brexit vote, the value of the sterling has fallen over 17 percent against the dollar, increasing the spending capacity of tourists visiting the country as the same goods now cost less in the U.K. as compared to any other major destination, research by Deloitte shows.
“The trend in luxury pricing in the UK is being driven mainly by the depression on the sterling — thus making the same item more affordable in the UK market than in any other major luxury market,” Nick Pope, fashion and luxury lead at Deloitte, told BBC. “People don’t like paying more for the same product.”
A Louis Vuitton Speedy 30 handbag — which costs $850 in Paris, $970 in New York and $1,115 in China — will set the consumer back by only £645 or $802 in London, Wall Street Journal’s report on the research showed.
Even as day-to-day commodities saw an increase in prices across the country, the report said luxury brands did not go in for a hike to avoid losing clientele, adding that almost 64 percent of these products were now the cheapest in Britain.
More examples provided by Deloitte included Balenciaga’s Foulard Fringe Dress — almost $400 cheaper in the U.K. than the U.S. — and a Brunello Cucinelli cashmere v-neck for men — $843 in Britain compared to $942 in France and $995 in the United States.
The fallen prices, however, will not last very long, the report says.
“Luxury brands are usually — and rightly — cautious about en masse pricing adjustments,” Pope explained. “But if over six to 12 months this sterling position becomes the ‘new normal’ — and hence margins are under continued pressure — I would expect more brands to respond with pricing adjustments.”