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With dollar low, US is one big outlet

Europeans arriving in droves for bargains

Email|Print| Text size + By Jenn Abelson
Globe Staff / November 24, 2007

WRENTHAM - Hours after her flight from Dublin landed in Boston on Thanksgiving, Alice Kinsella headed in a white van with a dozen relatives and friends to Wrentham Village Premium Outlets. The 36-year-old has never visited Boston, but she is bypassing the sights for an extended weekend of binge shopping that started at midnight yesterday.

For Kinsella and other Europeans, America is one big discount bin, thanks to a weak dollar that slid this week to another record low against the euro. As a result, tourists are spending thousands to travel to the United States to snag blockbuster bargains on everything from iPods to designer clothes and handbags.

By 4 a.m. yesterday, Kinsella had rung up nearly $2,000 in Christmas presents and winter clothes, including a $79 black leather jacket at Guess that she estimated would cost more than $250 in Ireland.

"The bargains for us are so great," said Kinsella, who paid $1,000 for a flight and hotel but expects to save even more on purchases here.

Kinsella is one of a record 1,000 international tourists who scheduled organized shopping trips yesterday to Wrentham Village Premium Outlets - more than double the number last year. Hundreds more were expected to come on their own, according to Beth Winbourne, the outlet's general manager.

Foreign travelers have long visited the United States to get their holiday shopping fix. After all, many design er brands like Tommy Hilfiger, Ralph Lauren, and Guess are cheaper here because sales taxes are lower and because the bigger market here allows goods to be priced more competitively.

But now American wares are even more of a bargain as the slowing US economy has weakened the dollar. Further, as the Federal Reserve has cut interest rates to boost the economy, the dollar has lost even more value, and global investors have realized they won't earn as much when they park their cash in greenbacks. As a result, the euro has shot up by 33 percent compared with the dollar since 2002, so Europeans who exchange 1,000 euros now get close to 1,500 US dollars. And the Canadian dollar is worth as much as the US dollar for the first time in three decades.

While some US shoppers are tightening their purse strings this holiday season amid rising gasoline prices, the slumping housing market, and the current credit crunch, the one silver lining for some merchants is the tidal wave of foreign dollars pouring into US stores.

"With Americans looking to cut back and conserve because of economic uncertainties, the holy grail this holiday-season year for retailers are the international travelers who are coming here in record numbers," said Patrick Moscaritolo, president of the Greater Boston Convention & Visitors Bureau.

Boston is projecting a 14 percent increase in overseas visitors this month compared with November of last year. The visitors bureau is trying to attract them with a shopping promotion launched last week that gives passengers flying from the United Kingdom on American Airlines a special 11 percent savings card for use at Macy's in Downtown Crossing and CambridgeSide Galleria when they present their boarding passes. In January, the promotion will include new markets, such as France and Italy, and additional merchants in Massachusetts. The shopping excursions usually are arranged by tour operators abroad, but visitors also can schedule them once they arrive in Boston.

The weaker dollar also is promoting tourism. On Monday, the US Department of Commerce said this past summer was a record-breaking season for international travel to the United States. Both the number of travelers and overall spending by visitors surpassed previous highs. The nearly $30.7 billion foreign visitors spent this summer, which includes purchases of food, lodging, and gifts, was a 14 percent increase over the summer of last year.

The promise of bargain shopping is a major draw for some international travelers.

The International Council of Shopping Centers released a survey Wednesday reporting that 20 percent of Canadian households said a strong loonie would lure them to shop in the United States, and 19 percent said they planned to purchase holiday gifts by telephone or online from US retailers. Already, L.L. Bean, the preppy cataloger in Freeport, Maine, said it has seen orders from Canada rise more than 20 percent recently.

But the influx of foreign shoppers may not be enough to propel sales growth this holiday season.

The Retailers Association of Massachusetts, for instance, predicts a mere 2.2 percent increase in holiday retail sales this year over the same period last year, about half the sales growth forecast by the National Retail Federation. And the federation's prediction of a 4 percent increase in sales to $475 billion would make this holiday the slowest for sales growth since 2002, when sales rose 1.3 percent.

"The holiday sales season of 2007 will create competitive and profitability challenges for local retailers," said Jon B. Hurst, president of the state retail group. "There's no question that European and Canadian shoppers have been key targets of late."

In fact, officials at Simon Property Group and General Growth Properties, two of the country's largest mall operators, said they have increased international advertising to promote shopping excursions for foreign travelers.

And the weak dollar, coupled with promotions, seems to be working. Daniel Reid, an American who lives in London, said he planned to do nearly all of his Christmas shopping yesterday at the outlets in Freeport, Maine, to take advantage of the exchange rate. He and his wife are bringing extra duffel bags to carry their new purchases home.

A duffel bag might come in handy for Kinsella, the traveler from Dublin. After a few hours of rest at the Sheraton in Boston yesterday afternoon, she planned to hit CambridgeSide Galleria last night and return to the Wrentham outlets today for another round of spending that are likely to total $5,000.

Meanwhile, at 7 a.m. yesterday, as part of a separate organized trip, Mary Finnerty headed with more than a dozen shoppers from Limerick, Ireland, to Wrentham with $2,000 in her purse. The 43-year-old customer service representative spent nearly $600 on airfare and about $170 on a room at Jury's Hotel in Boston that she's sharing with three others, but said she'll save many more hundreds of dollars shopping.

Six hours into her shopping spree, she had racked up about $800 in purchases, including a $41 Estée Lauder perfume set and a $30 pair of Levi's jeans. She planned to return to her hotel at 8 p.m. - after more than 12 hours of shopping. Next up: South Shore Plaza in Braintree early today.

"I never expected the euro to be so strong," she said. "This may not happen again. So I'm spending like crazy and worrying about it later."

Jenn Abelson can be reached at abelson@globe.com.

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