The dollar has dropped in value by 5.6% against the pound since Christmas, dramatically narrowing the price advantage that Britain’s luxury watch retailers enjoy over their peers in the United States.
One pound bought $1.33 on December 26; a month later on January 26 it buys $1.41.
As a result, retail prices including sales taxes in the US are now less expensive than in the UK when prices in both countries are converted into pounds.
A Rolex Perpetual Oyster ref. 114300 is priced on Bucherer’s UK website yesterday at £4150. The same watch at Fredric H. Rubel Jewelers in Laguna Beach, California, costs the equivalent of £4043 at today’s exchange rate.
A GMT Master II C is £28,150 at Bucherer but the equivalent of £27,128 in California.
Before UK retailers get too anxious, it is important to note that customers from outside the European Union can reclaim the 20% VAT they pay on their purchases.
This continues to give a considerable price advantage to UK retailers that would only be wiped out if the dollar slumped to $1.7 to the pound.
Visitors from the European Union cannot reclaim VAT, but Britain remains cheaper today than on the continent.
In France, for example, a Rolex Sky Dweller ref. 326933 costs the equivalent of £13,728. The same watch in the UK today costs £12,600, including VAT.