Friday, June 24, 2016

BREXIT: Currency Arbitrage Via Luxury Brands

Dissecting the geo-political consequences of Great Britain's vote to exit the EU is best left to the pundits. Watching markets and currencies shift so drastically, however, it's almost impossible not to be tempted to take advantage of pricing inefficiances in retail.



Most money managers and hedge experts consider such an anomaly an arbitrage opportunity. Arbitrage is defined as the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset. In this instance, we can consider Chanel classics, Hermes Birkins or other fashion items to be our 'asset' or commodity.

If you've ever shopped in London, you know it's normally very expensive. As a matter of fact, it's often sited as one of the most expensive places in the world to shop. Well, not right now. As the pound to dollar exchange hovers around 1.3, we couldn't help from running the numbers on some of our favorite luxury items.

Hermes Birkin 30 Togo
$11,300 New York
$8122 London
Savings of $3100 + VAT ‪back

Chanel new medium Boy Bag
$5200 New York
$4400 London
Savings of $800 + VAT back

Beyond looking at these high priced fashion classics, there are a few other international websites that will ship to the United States. You can shop Net-A-Porter's UK site and have merchandise shipped to the US. A Gucci GG Marmont bag is $800 less expensive when you buy it on the British version of the site. There is also a large markdown section on the site, but the discounts aren't as high as the US. You might need to check back and forth before committing to a currency.

In some instances, it might pay to shop from the UK version of a US retailer. For example, on Shopbop you can shop in British Sterling Pounds and ship to the US, Just make sure the shipping doesn't overtake the benefit. Below are a list of sites that you can consider. Many even have some great sales. Happy BREXIT!!!

Charlotte Tilbury Cosmetics

Farfetch up to 70% off

Forward by Elyse Walker up to 50% off

Matches up to 50% off

Shopbop up to 70% off

Stylebop Up to 50% and extra 10% off for the weekend

The Corner Up to 70% off

21 comments:

Nomad said...

i was going to look into this myself but now you have done all the hard work :) Thanks!

Lila Delilah said...

So glad to have been helpful!

Heather said...

Will Hermes ship to the US via their UK site?

Lila Delilah said...

Not sure of the online shopping rules but boutiques won't ship.

Unknown said...

Do you know how much they will charge for custom if I have a family member ship the goods to me?

M said...

Be sure to check the exchange rate on your credit card. Visa's rate today is 1.49 - considerably different than the spot rate of 1.37.

Lila Delilah said...

Sorry. I don't know custom rates but you would get the VAT back, which is considerable.

Lila Delilah said...

Good point!!!

Anonymous said...

I like your blog a lot but I must say I am offended by this post. Brexit is a horrible, horrible thing. A serious tragedy that will have huge ramifications.

Lila Delilah said...

I am sorry that you are offended. I'm I'm unclear as to how you see we are making light of the situation. We were just pointing out inefficiencies in the financial market,

Ben said...

For you to say "happy Brexit!" and encourage shoppers to exploit the pound's decline against the dollar makes light of what is a very sad event. I know that this is a shopping blog, and enjoy reading it, but this post represents capitalism at its worst.

Anonymous said...

oh please! Get your own life. If its really offended you, then you should stop reading, why eveb bother to comment here.

tay said...

i think retailers have caught on and may have upped the prices in british pounds. i just did a trial run with net-a-porter. an equipment blouse that cost $280 on the US site is going for £295.83 AFTER VAT is removed...before VAT, it is £345.

i havent tried the other websites yet, but given how good the sales are right now, i probably will and i'll report back if i do...

thanks for this post, btw. i was thinking the same thing when brexit was announced...

tay said...

ok, i spoke too soon on net-a-porter. a pair of gianvito rossi boots is $200 cheaper on the UK site than US (after VAT is removed in checkout).

however, farfetch's UK site automatically switches you to US dollars in checkout if you use an american address. in my case, a moschino bag that was £273 turns into $413 at checkout-- clearly NOT a conversion of the money, and instead just giving you the price for americans.

Lila Delilah said...

I doubt they would change prices as they are in the business of selling merchandise but it's not impossible. Use the price examples in the post and see if they are still the same.

Anonymous said...

I tried to order a shirt from UK site in vein at the corner.com which is a part of net-a-porter group. Iit seems that $50 less than the U.S. price but I could not log in with my US site account. Will I have to make new account with different email, and then ship it to the U.S....I like this post but wonder if we can really order from UK sites and then ship it to the U.S.... Please share your tips if someone orders from UK site!

tay said...

i've found that farfetch and forward would give you the normal $ price when you go to check out and your address is american...it does not do a currency conversion.

net-a-porter seems to let you use the UK site to ship to the US, but i did not complete my checkout. i am going by how it looks when i begin to check out. however, not everything on net-a-porter (talking about full price items here) is cheaper on the UK site...some stuff is more expensive.

Lila Delilah said...

I'm sorry but i can't say i checked out and made a purchase on each of these sites. It might help to call customer service if you find the currencies aren't being converted correctly. You're likely right, not everything will be cheaper but many items are. It looks like the pound might continue its decline. Keep your eyes open....

tay said...

sorry, i didnt mean for it to come across as a criticism of your post. i was more just sharing information for you and other shoppers.

Anonymous said...

^This

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