Rolex, Patek Philippe, Omega, Audemars Piguet and other luxury watchmakers have increased prices twice already this year, most recently on September 1 when they were hiked by 5-7% by most brands.
That was an attempt to maintain parity of prices for customers in different countries to prevent a slump in sales in one market and a spike in another as people plan their travel and shopping around the world considering where they can find the best value.
A combination of government policy in the UK, where the new Chancellor of The Exchequer, Kwawi Kwarteng, has signaled he will restore instant VAT rebates for visitors, the strong US dollar and weakening pound, have made a mockery of brands’ attempts to maintain price parity.
Looking at Rolex, alone, which raised prices by up to 7% at the start of this month in an attempt to level the playing field, prices are already 17-19% cheaper for an American shopper buying in the UK because of the slump in value of the pound.
This is before the reintroduction of instant VAT rebates on goods bought in the UK by overseas visitors.
If rebates were reintroduced today, allowing overseas visitors to claim back the 20% VAT as they leave through a UK airport, American visitors would be better off by over 30%.
For a 41mm Rolex DateJust in Oystersteel, American visitors to the UK would save over $2,800 if VAT rebates were reintroduced and the exchange rate remained at the current $1.05 to £1 — more than enough to cover flights and hotel costs.
If Americans come to the UK and manage to buy at white gold Rolex Daytona, the saving would be over $10,000, so why not fly first class as well?
Even today, without the VAT cash back, it would be worth the trip for a steel Air-King, which is almost $1,500 cheaper on the UK side of the Atlantic.
The percentage savings are broadly similar across watch brands, so the more people spend in the UK, the more they save in comparison to prices in the USA.
It isn’t only American’s who can benefit from the spending power of the US dollar right now.
Most oil-rich Arab countries peg their currency to the dollar, and are just a seven hour flight away from the savings available by shopping in the UK.