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How shops are coping with a weaker pound

"I really shop when the pound falls in value," says American Jian DeLeon.

The 31-year-old editorial director at online US fashion website Highsnobiety says his favorite luxury brands are now substantially cheaper in London.

"Like anything from Comme Des Garcons. I got a jacket last time I was there for 40% less than I would have paid here," he says.

Now that some brands are significantly cheaper, he spends about 350 dollars each time he comes, but thinks the favourable exchange rate means he saves around 100 dollars.

Just over a year on from the EU referendum, the pound is still around 16% lower against the dollar.

The weakness has lured over a flock of international tourists hungry for high-end brands at relatively bargain prices.

Payments firm WorldPay says non-UK consumers’ card spending at department stores rose by a fifth in the first three months of the year, while spending on electrical goods rose 22.7%.

"The extreme currency fluctuations encourages shoppers to buy more," says Honor Strachan, principal retail analyst at GlobalData.

"They’re getting more for their money."

But how do companies manage this kind of discrepancy?

Many of the world’s most famous brands — such as Burberry and Apple — simply raised their UK prices to try and make sure what they sold cost broadly the same across their international markets.

But luxury footwear brand Crockett & Jones, which has 12 stores worldwide across locations including London, Paris and New York as well as global wholesale partners, says it has deliberately left prices unchanged.

"The last thing we want to do is abuse our customer confidence and raise prices in the UK.” says James Fox, export sales director at the firm.

Mr. Fox believes that in the long term it’s best to keep pricing simple.

He says generally any discrepancies tend to average out across currencies, and that re-pricing is only possible "once or twice a year" due to the upheaval it causes for the business overall.

So is he concerned that the firm could be losing out financially?

"We are fortunate to be in a position that we have a few very strong ’Brexit proof’ markets which underpin the company when the UK is trying its best to screw up international trade," says Mr. Fox.

By selling both through its own stores and through wholesalers the firm’s risk is already spread out, he adds.

But it is also important not to be too greedy. Many US retailers that have come to the UK have simply swapped their dollar signs on their US price tags for pounds - betting that British consumers will be willing to pay a premium for their goods.

Yet for retailers doing a straight currency conversion from their local currency to the country where they are selling their goods also doesn’t necessarily work.

Many firms, particularly larger brands such as Hermes also use currency hedging to protect themselves. This involves working with a bank to buy currency at the current rate to protect themselves against adverse future volatility.

In the end, though Ms. Strachan says a company’s ability to cope with currency volatility comes down to how much people want to buy what they sell.

"If they still want it customers will buy it," she says.


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