America is becoming the world's discount store. sales are up by 30% over the same period last year.
Land of the Spree
How do you say 'Victoria's Secret' in Icelandic? With the dollar having hit new lows against currencies around the globe, America is becoming the world's discount store.
By CANDACE JACKSON
December 15, 2007; Page W1
Retailers are reporting a surprise hit this holiday season: luggage.
As shopping-mad tourists from overseas take advantage of the weak dollar, many are having to buy extra suitcases to cart all their purchases home. The Tumi store at New York's Time Warner Center says sales are up by 30% over the same period last year, thanks largely to foreign travelers staying at nearby hotels. At FAO Schwarz, customers are buying duffel bags sold right by the cash registers.
In recent years, the U.S. has been beset by a steady stream of foreign tourists seeking bargains. Now, with the dollar at new lows -- and the holiday retail season in full swing -- the stream has turned into a flood.
The influx has some retailers rolling out the red carpet for anyone with a foreign passport. To prepare for Chinese shoppers, the South Coast Plaza in Costa Mesa, Calif., is in the midst of printing a store directory in Mandarin. Earlier this month, Taubman Centers, which owns four shopping centers in the Detroit area, started sending limousines stocked with eggnog and store coupons to chauffeur shoppers from Canada for a "six-hour shopping spree" across the border.
Stores say overseas shoppers aren't just buying a lot -- they're also showing some distinct spending habits, often different from Americans'. Saks Fifth Avenue says Europeans are snapping up UGG boots (hip with Americans circa 2004), for example. Many Asian shoppers tend to go for the highest-end luxury brands like Louis Vuitton and Gucci, but also wellness-related items like massagers and vitamins.
Josefina and Carolina Hallström flew to New York for a few days of shopping on Icelandair from Stockholm. The pair, ages 21 and 25, were on the lookout for a Victoria's Secret store. "We go for the lotions and perfumes," said Carolina, as she lugged a shopping bag with eight pairs of shoes in it (she'd already pitched the boxes). The underwear retailer's annual fashion show airs in Sweden, even though there aren't any stores there, she says. Plus, "shampoo is also much cheaper here."
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Holiday Blog: Nintendo announced a raincheck program with GameStop for exhausted consumers looking to buy the Wii; Online holiday sales are "clearly" being hurt by the general consumer pullback, Bear Stearns said in a research note.In November the U.S. dollar hit a record low against the euro, with one euro buying more than $1.48 (as of late Friday in New York, one euro fetched $1.44). For Brits, a pound now buys slightly more than $2. And with cheap flights, Europeans say they can nearly break even on their travel expenses with the money they save on clothes and gifts.
Canadians are also driving south to find bargains. In September, the greenback hit parity with the loonie for the first time since 1976, reversing a long-held American conceit that things were cheaper north of the border. (Back in January 2002, the U.S. dollar bought 1.6143 Canadian dollars.) As of Friday afternoon the U.S. dollar bought 1.01 Canadian dollars.
Craig Johnson, president of Customer Growth Partners, a retail consultant, says the overseas shopping jaunt, once the territory of the upper crust and corporate jet-setters, has "dramatically expanded" to the masses. "It's not just proper private school accents" heard in stores, he says. "It's regular lower and middle class people who come over because of the savings."
The Dolphin Mall in Miami says the increase in shoppers from abroad has forced it to add two more daily shuttles on some days to Miami International Airport. The mall's tourism manager, Lucia Plazas, says Germans, Italians and others have been buying so much she's had to call cabs to drive behind the buses carrying tourists who can't fit on the shuttles once they're packed with purchases. "The amount of bags has been a challenge for the drivers," says Ms. Plazas.
This December at the Holiday Inn near the Mall of America in Bloomington, Minn., more than a quarter of the 171 rooms are sometimes filled with shoppers who have come over on direct flights on Iceland Air from Reykjavik. Each spends around $2,500 at the mall's stores, says Evie Walter, the hotel's director of sales. "'Where's Victoria's Secret?'" is usually one of the first questions they'll ask, she says. Though some don't speak English, "there's usually someone in the group who can understand," says Ms. Walters. "If not, charades always works."
Even in Fargo, N.D., which is a three-hour drive from the nearest major Canadian city, there's been a relative windfall of foreign shoppers this year. Staffers at West Acres Shopping Center, which houses a Lady Foot Locker, an American Eagle Outfitters and Gymboree, recently started counting license plates in the parking lot and walking through the mall armed with clipboards, to tally the number of Canadians.
Rusty Papachek, the mall's general manager, says the day after Thanksgiving one in 12 customers was from across the border. (Last year they didn't count because they hardly noticed any non-locals, he says.) Mr. Papachek is now running radio promotions in Winnipeg, 220 miles away.
Shoppers at Wrentham Village Premium Outlets in Wrentham, Mass.
Canadians are also driving up sales at the Bass Pro Shop in Auburn Hills, Mich., buying ice-fishing and moose-hunting gear, says Doug Phillips, the store's promotions manager. He says in the past couple of months about one in 10 shoppers has been Canadian, compared with just a handful a couple years ago.
In New York, Lord & Taylor's sales are up by 25% so far this December versus the same December period last year, due in part to growth in shoppers from overseas, says president and chief executive Jane Elfers. About two weeks ago the company began advertising the store's holiday windows as a tourist destination on 3,600 taxi TV screens.
At Saks Fifth Avenue's flagship store in New York, the alterations team has noticed a rise in requests for quick-turnaround jobs from overseas tourists who want their clothing ready before they leave town. Suzanne Johnson, the general manager, says she's also changed the signage in the store to keep things simpler for foreigners. "They really wouldn't understand 'contemporary collections,' so we just say 'denim,' " says Ms. Johnson.
While overseas shoppers avoid buying gift cards because they usually can't be used back home, they're shelling out for electronics that aren't always compatible in Asia or Europe. At the gadget-stocked Brookstone store in Tyson's Corner Mall near Washington, store manager Michael Jones says he's added 10 new items with built-in electricity converters for European and Asian customers. He estimates that one in every 20 shoppers at his store is from the United Kingdom this year, up from about one in 100 last year. Japanese shoppers, he says, are snatching up massaging chairs, which start around $2,000, and shipping them back home: "They understand it better."
Maureen Crampton, the director of marketing at the Forum Shops at Caesars in Las Vegas, says British customers there tend to gravitate towards brands they have back home like Ted Baker and Thomas Pink. Christine Aquino, a manager at Pink, says British men have been buying the 140-thread-count Egyptian cotton "Prestige" line of dress shirts. Those are popular with American men too, she says, but Brits tend to go for brighter patterns like red striped, blue and green. "They're more colorful than most people here in the United States."
Rock & Republic, a company that makes designer jeans and accessories, has noticed shoppers from the U.K., France and Germany traveling to the U.S. to buy their clothes -- even though they're also available in Europe. "It obviously doesn't make our international retailers very happy but it gives people an excuse to come to the states because you get so much bang for your buck," says Andrea Bernholtz, the company's president. The most popular denim style this year is the boot-cut jean, she says. European customers, however, "really like the embellished look," including jeans decorated with crystals, flocking or studs. "In America we're a little more laid back, and maybe we're not going to wear crystal jeans everyday."
Taking a break from shopping outside the crowded Macy's flagship store on 34th Street in Manhattan, sisters Maura and Maired Collins, from Galway, Ireland, sipped orange juice and recounted their finds for the day. So far, they'd bought scarves at Betsey Johnson and perfume from Christian Dior and DKNY.
With only two days left, they hadn't yet had time to check out sights they'd been hoping to see, like Ellis Island. "We will do some tourist things," said their other sister Geraldine Jennings, before admitting that it probably wouldn't be the next day. "We hear there might be some good deals on jewelry."
Though most retailers say the biggest growth this year has been in shoppers from Europe, some are bracing for business from other markets that are beginning to see the U.S. as an inexpensive and varied shopping destination. Rosemary McCormick, the president of Shop America Alliance, a group that sells shopping tours in the U.S. and markets hundreds of U.S. malls overseas, says that Korean shoppers tend to go for luxury brands -- and vitamin and health supplements. "They will walk into a GNC and clean that place out," says Ms. McCormick.
Tom Dowd, GNC's senior vice president, says Asian customers tend to spend about five times what typical American shoppers spend, and some of the big sellers include fish oil (which is supposed to help the cardiovascular system) and coenzyme Q10, a dietary supplement.
At FAO Schwarz, the hot holiday gift item this year is a small remote-controlled helicopter. Ed Schmults, the company's CEO, says while that's been a big seller with Americans this year, shoppers from elsewhere have their own favorites.
In an unscientific tally, the toy store's Fifth Avenue flagship's cashiers have been noting what foreign shoppers are buying. Swedish shoppers are buying crafty items like knitting kits and finger paints, he says. And this year, Lithuanians, says Mr. Schmults, "are all about puzzles."
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