American luxury shoppers are flocking to Europe

What do London, Paris and Milan have in common? A surge in American luxury shoppers, who are on the continent to buy European high-end fashion and accessories, as the dollar continues to stretch to its highest value in 20 years.

In a recent note, Bank of America said: “Very strong demand from US luxury customers was the biggest positive tailwind in 2021. The strength has continued in 2022 despite a more complex macroeconomic backdrop.”

Strong demand for luxury

Higher costs in energy, fuel, borrowing and general costs of living, have not curbed American appetites for luxury. The boost will be very welcome to Europe's luxury houses, who are yet to see a rebound from Chinese customers since the pandemic. Sales to local Europeans remains more challenging, with inflation soaring and consumer confidence ebbing to all-time lows.

European prices after tax refunds can be as much as 20 percent cheaper for the same luxury items in the U.S.

The Wall Street Journal on Monday said French luxury giants LVMH and Kering “say spending shifted to Europe from the U.S. over the summer because Americans were taking advantage of the strong dollar to splurge in Europe.”

According to Bain & Co., the “luxury market continued to perform strongly throughout this year to date, with winners for brands across the board, and positive growth for some 95 percent of brands. All luxury categories have now recovered to 2019 levels or better, with hard luxury, leather and apparel leading the resurgence following the pandemic.”