The post-Brexit crash in the value of the pound means that the UK is now the cheapest market in the world for luxury goods.
Research from accountancy firm Deloitte found that prices of luxury goods in the UK were the cheapest around the world.
The analysis, which was conducted for the Wall Street Journal, looked at the prices of various luxury items in different markets, a Louis Vuitton handbag was found to retail for $802 (£657.5) in London, $850 (£696.8) in Paris, $970 (£795.2) in New York and $1,115 (£914) in China.
The falling value of the pound against the dollar was labelled as the cause for these price differences, and Nick Pope, a director in Deloitte’s advisory business, told the website Fashion Network that luxury brands would adjust their prices to account for currency fluctuations in the future. “Luxury brands are often cautious about making ‘reactive’ pricing adjustments because such moves may risk the brand having a negative perception in the eyes of the consumer,” he said. “If over the next 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.”
The weaker pound has already attracted an increased tourist spend to the UK, with Westfield Stratford reporting a 116% year-on-year surge in Chinese consumers visiting the centre.
Tax free tourist spend has also soared in London’s West End, jumping by 44% year on year as visitors take advantage of the favourable exchange rates. Chinese visitor spend in the shopping district was up 65% on August last year to an average of £1,453 per shopper.