Monday, January 3, 2011

Luxury in Europe

Traveling to Barcelona during the holidays, I noticed something amusing, pricing arbitrage can occur even with the most common luxury brands.  Part of the reason why I noticed this was because we went to Barcelona, Spain with two goals, visiting all of the historical architectural marvels (sight seeing) as well as to do some shopping.

European brands tend to be cheaper than the same item in the US.  This is because of several factors.  For one, they do not charge tax in Europe, items are priced the same as their US counterparts but with Tax already included.  As a tourist, you can get this tax (VAT) back at the airport.  The one caveat is that you have to spend a minimum of 90 Euros for this to apply.  This should be very easy for most people.

The brands cheaper in Europe include the following:

  • Chanel
  • G-Star
  • Hermes
  • Zara
  • Mango
You can anticipate getting about 12% back from your purchase in VAT along and another 10-15% discount from US retail prices (depending on the exchange rate, the exchange rate of Euro to Dollar when I went was 1.30x).

British brands, such as Burberry, tend to cost about the same even after the discount, so there is really no point in buying these items overseas.  

American Brands, such as Kiehl, Tiffany, are much more expensive overseas.  It seems like these American brands were too lazy to try to re-price their products appropriately.  An item that costs $100 in the US will cost 100 euros in Barcelona, which equates to $130.  Yikes.

No comments:

Post a Comment