SHOPPING AS THE DOLLAR DROPS

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Shopping as the Dollar Drops
A hot destination for European travelers this winter: Minnesota.
At a Holiday Inn near the Mall of America, the giant shopping center just outside Minneapolis, foreign tourists shopped so much this week that the hotel had to set aside four guest rooms to hold their suitcases after filling up its baggage-storage room.

Europeans are flocking to U.S. stores for Christmas shopping because the dollar’s weakness makes the U.S. look like a bargain basement to them. The British pound yesterday hit a 14-year high against the dollar, and the euro has hovered around historic highs, too.

With more retailers opening globally, it’s easy for Europeans to do a little research to find out how much cheaper the U.S. is than their home countries. And travel agents, airlines and hotels are marketing heavily to bring overseas shoppers to the U.S. in the hope that the lure of a pair of Levi’s jeans that costs half what it does in Europe will override America’s onerous entry requirements for foreigners.

Earlier this week, only a few hours after her plane landed in New York from Edinburgh, Kay Sandeman, a 22-year-old Scot, was at Rockefeller Plaza shopping with her mother. She was clasping a photocopied article from a U.K. magazine that had tips on where to find bargains in the U.S. “Look,” Ms. Sandeman says of the prices. “It’s almost half.”

New York City’s tourist board expects 7.3 million foreign visitors this year, up from 4.8 million in 2003, its low point after the Sept. 11, 2001, terrorist attacks. The biggest single group by far are the British, and 95% of them say they go shopping during their visit — while only 39% plan to visit a museum, says NYC & Co. The Four Seasons Hotel in New York has seen an 18% rise in European guests this year. Many Europeans are also upgrading to four- or five-star hotels, instead of three-star accommodations, says Lisa Warner, assistant marketing manager for Trailfinders, a large travel agency based in London.
        

Some airlines and tour operators are trying to stoke demand even more with sales, and say they can afford to because they’re passing along savings from a weaker dollar. Since it takes fewer pounds to pay for a hotel room, tour operators can lower the price they charge Britons in pounds. When British Airways recently renegotiated its contracts with a series of U.S. hotels, it cut the price of a night in the Lenox Hotel in Boston to £100, from £124. It also extended a London-New York pre-Christmas fare of £248 by nearly two weeks, a BA spokeswoman says.

U.S. retailers are advertising overseas to grab the attention of Europeans planning their shopping trips. The Chelsea Premium Outlets, a chain that includes discount outlets in New York, Las Vegas and Chicago, is providing voucher booklets to 24 U.K. tour operators, double the number it offered last year.

At London’s Heathrow airport yesterday morning, waiting to check in for a flight to New York, Donna Sinclair’s sons were planning their shopping. Ben, 10, wanted an iPod and Sam, 13, says he wanted “some cool trainers” — Britspeak for sneakers — ideally Nike Air.

“The exchange rate is brilliant, it’s practically doubling your money,” says Ms. Sinclair, 35 years old, from Great Yarmouth. Her husband brought only two changes of clothing and one pair of shoes in anticipation of his purchases.

This isn’t the first time Europeans have smelled a bargain. Clothing has historically been less expensive in the U.S., and U.S. retailers tend to mark down more items than European stores.

Denise Morgan, a 49-year-old who lives in England, this week shopped with three friends on Fifth Avenue, where they picked up bracelets at Tiffany’s, Estee Lauder makeup at Bloomingdale’s and stuffed animals at the Disney Store. “It’s like a military operation,” she says. “We know how to do this.”

But they missed out on a new line of jeans designed by British celebrity Victoria Beckham, which retail for as much as £325 in England but cost about half that in New York. Bloomingdale’s had sold out.

Last Saturday, Patti Lee, the general manager of Macy’s Herald Square store in New York, met two British women who were shopping and who asked her for directions to a particular department. “They each had three or four shopping bags and it was their fifth trip” to New York, says Ms. Lee. Macy’s offers international visitors a card that offers them an 11% discount, and its salespeople are equipped with charts to help foreign visitors convert the sizes.

Travelers returning to Britain from the U.S. are supposed to pay import duty and tax on all purchases exceeding £145 (excluding limited quantities of certain items such as cigarettes and liquor). The European Union requires travelers to pay tax on purchases exceeding €175. But many don’t bother to declare their purchases.

The pound hit $1.9699 Thursday, a new 14-year high. At 4 p.m. in New York trading, the pound stood at $1.9659 while the euro was at $1.3244. Some expect the dollar to weaken further, possibly touching $2 to the pound on concerns about slowing growth prospects in the U.S. and possibly lower U.S. interest rates.

The weak dollar is stoking demand for other services, too. Wendy Lewis, a plastic-surgery consultant, says more of her British clients are traveling to the U.S. to take advantage of the exchange rate. Ms. Lewis says New York is the No. 1 destination for Britons seeking plastic surgery, followed by Boston. “A facelift in the U.S. of top, top quality is $15,000 — so that’s half of what it is [in the U.K.],” she says.

Some foreign tourists can afford a meal that might be prohibitively expensive at home. Gordon Ramsay, the British chef who has several Michelin-star restaurants in London, opened a new restaurant in New York this month. His New York outpost charges $110 for its seven-course “Menu Prestige,” which includes foie gras and apricot soufflé. The “Menu Prestige” at one of Mr. Ramsay’s London restaurants costs £110 pounds, or $216 at current exchange rates.

The weak dollar is even encouraging many to make a trip for the post-holiday sales. Trailfinders recently launched a three-night package to Minneapolis to visit the Mall of America in January (average temperature: 12 degrees Fahrenheit). The package costs £399, or $785, and includes a direct flight from London and three nights in a three-star hotel.

The Mall of America plans to double in size in the next four years, and is planning to add more luxury shops and a day spa to appeal to European travelers, who spend more than twice what local shoppers do. About 6% of the Mall’s 40 million visitors a year are from overseas, and its executives hope to double that percentage, says Doug Killian, associate director of tourism for the mall.

Tatjana von Braun, a mother of two from Bonn, Germany, recently went on a shopping spree at the mall. She bought a corduroy shirt and a pair of sand-colored corduroy children’s pants at Gap. For the price of the pants, $17, “you can’t even get a T-shirt in Europe,” says Ms. von Braun, who also bought some pieces by fashion brand Juicy Couture for her neighbor. “Juicy Couture is prohibitively expensive back home.”

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December 4, 2006 at 10:41 AM