On almost any afternoon, you can find hundreds of foreign shoppers at the Macy’s store in Herald Square, Manhattan, a commercial hub for international travelers.
“It’s mostly foreigners that come to shop here,” said Erin, a young sales representative for Calvin Klein.
For many people living in Western Europe and Japan — among other developed countries outside of North America — a Lacoste t-shirt or a pair of designer jeans costs less than it would in their home countries.
That’s because over the last few years, the value of the dollar has fallen against both the Japanese yen and the euro (which is the currency of 16 countries in Europe). As a result, foreign tourists have found shopping in the U.S. to be increasingly attractive.
“These days it’s beneficial for most Europeans to come and shop here,” said Mika Malinen, a Finnish traveler who was shopping on a weekday afternoon with two friends from his home country. “We can get a lot more stuff here than we would back home.”
“If I go shopping in Finland and buy a pair of Calvin Klein jeans, it can easily cost 70 or 80 Euros,” he added. “Here I just paid $30, which is equal to about 20 Euros.”
How does this work? In mid-August, 2009, one euro could be converted into roughly $1.43 U.S. dollars. That’s why a pair of $30 jeans would cost 20 euros (actually, to be exact, it would cost $20.97, or $30 divided by 1.43).
But back in the summer of 2005, the euro-dollar exchange rate was closer at 1.20 dollars per euro, so that same $30 pair of jeans would cost 25 euros. And if we go back to 2002, the euro-dollar exchange rate was roughly 1, making it even more expensive for a European tourist to shop in the U.S. Finland is one of the countries which uses the euro as its currency.
Japanese tourists are also enjoying the benefits of the same decline in the value of the dollar. For example, the yen-dollar exchange rate in the summer of 2007 was roughly 122 yen per dollar, so that a $30 pair of jeans would cost 3,660 yen ($30 times 122 yen). By comparison, in mid-August 2009, the yen-dollar exchange rate had dropped to 95, so that the same pair of jeans would cost only 2,850 yen.
With Americans cutting back, Macy’s has made an extra effort to attract international tourists, even from countries where the currency has not changed much against the dollar. The department store chain offers international visitors a discount card, which cuts 11% off the cost of purchases. The card is good for 30 days, which is a lot of shopping. (Surprise: Domestic travelers can also get a discount card from Macy’s, but it’s only good for 5 days).
“Because of the discount, I am able to save money,” said Arvinder Singh, a traveler from India who was checking the $70 price tag on a collared Guess shirt. “At home this shirt would normally cost about 3,500 rupees, but now I get it for less.” (The exchange rate is roughly 50 rupees to the dollar).
Are there any exceptions? Tourists from Great Britain are taking it on the chin. The British pound has dropped against the dollar, making traveling and shopping in the U.S. more expensive for British tourists.
Reported and written by Damian Ghigliotty (8/12/09)
