The price is right for foreign shoppers in the U.S. as the sagging dollar boosts their purchasing power on everything from jewelry to vitamins.
“When I come to New York, it feels like I am getting great deals,” said Molly Lewis, a 40-year-old nurse from Manchester, England, who spent an afternoon last week hunting down bargains on Louis Vuitton handbags in Manhattan. “Things are much cheaper here than back home.”
The British pound had climbed 13 percent against the U.S. dollar in the past year, along with gains in the euro and Canadian and Australian dollars. That’s given travelers a zest for spending, which may help U.S. retailers make up sales as budget-wary U.S. consumers stick to the sidelines. Travelers from abroad spent $8.9 billion on food, lodging, gifts and entertainment in the U.S. in February, up 7 percent from last year, according to the Department of Commerce.
The Mall of America, the biggest shopping center in the U.S. with 520 stores, is reporting a surge in international visitors, hitting retailers from Columbia Sportswear Co. to Coach Inc. in search of American goods.
The dollar has weakened by about 4 percent this year, according to Bloomberg Correlation-Weighted Currency Indices. The measure of 10 developed-nation currencies has fallen 15 percent in the past year amid concern the Federal Reserve’s accommodative monetary policy will debase the value of the dollar and spur inflation.
International visitors to the Mall of America jumped 10 percent in 2010 and climbed through the first four months of the year, said Doug Killian, the director of tourism at the Minnesota shopping complex. Those visitors spend about 2.5 times more than people from the U.S., he said.
The Mall of America aims to take advantage of that by increasing its international marketing budget 20 percent this year. Non-U.S. visitors who book with certain tour groups also get free coupon books that normally cost $10 apiece.
Upscale retailers also have followed suit. Macy’s Inc.’s Bloomingdale’s chain offers a 10 percent discount for foreign shoppers with photo identification, spokeswoman Marissa Vitagliano said. Chains like Bloomingdale’s and Saks Inc. helped make New York a top shopping destination last year, followed by Los Angeles and Las Vegas, said Rosemary McCormick, president of Shop America Alliance, a travel trade organization.
“I’ve been in New York for less than two hours, and I am already shopping,” Daniel Kremerh, a 33-year-old from Berlin, said during a trip to Bloomingdale’s. “I can afford the real name-brand stuff here, where in Berlin, I get knockoffs.”
The dollar’s sluggishness may last through the year because of slowing U.S. growth and the widening interest-rate gap between the country and the rest of the world, according to strategists at Barclays Plc and Morgan Stanley. Economic growth slackened more than anticipated last quarter, prompting the Federal Reserve to say record-low rates are needed to foster growth.
Typically, Shop America Alliance’s McCormick said, international visitors are spending about one-third of their outlay on shopping. They also have to eat: International customers at restaurants owned by Alicart Restaurant Group in New York grew by about 65 percent in the first quarter, with an “explosion” of after-theater diners at its Virgil’s Real BBQ, said Chief Executive Officer Jeffrey Bank.
Many remain focused on deals. Young Choi scoured San Francisco for goods from Nike Inc., J. Crew Group Inc. and Coach on a family visit last week. The 63-year-old retired teacher expected her load to be a little heavier on the way back to Seoul.
“Basically she’s going to buy a really big large suitcase, so she can put all her stuff in and bring it home,” said her son, Yong Park.
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