The Devil Buys Prada in Brazil Where It's Cheaper

Prada é mais barato em São Paulo.

Arbitrage in buying luxury goods worldwide is something of an interest of mine--and a global hobby for the well-to-do shopper. Where's the least-expensive option for buying the latest in-demand fashion goods? Chinese mainlanders go to Hong Kong to take advantage of cheaper luxury goods there due to lower duties and taxes. How about in the Americas, though? Apparently, something similar is going on right now as discerning American luxury buyers flock to Brazil of all places to take advantage of the latter's weakening economy, which has resulted in cheaper luxury goods.

But wait a minute, you say: Shouldn't a weaker Brazilian real result in more rather than less expensive imported luxury goods? Well, not quite in this case:

Cartier and Louis Vuitton, those global symbols of opulence, suddenly look like bargains in one of the world’s economic trouble spots: Brazil. Because of a plunge in the value of Brazil’s currency, the real, many marquee-name luxury products are now cheaper in Sao Paulo than they are in New York.

The key thing is that luxury item sellers in Brazil are temporarily tolerating smaller profit margins given higher import and sales taxes.They will eat those for now. So, the net result for now is that it's cheaper to buy name-brand luxury items in Brazil than in New York:

The disparity provides another example -- albeit a rarefied one -- of how the collapse in the real is rippling through the nation’s economy. Prices of many imports, from mobile phones to wine, have surged because of the weak real, adding to economic angst as Brazil heads for its worst recession in a quarter century.

But many high-end items have actually gotten cheaper in dollar terms because of a quirk of the luxury-goods industry. Louis Vuitton, Prada and many others don’t adjust prices very often, and many tolerate narrower profit margins in Brazil to partially offset high import levies and sales taxes. “It’s truly a momentary phenomenon,” said Nadya Hamad, the manager of a Louboutin shoe store at the JK Iguatemi mall in Sao Paulo. “We used to get complaints about how much more expensive things were here. Now our customers are coming in saying how much cheaper it is.”

How much cheaper is it in Sao Paolo than in New York? More comparable items come out costing less in the South American megacity:

How much cheaper? A tour of a few malls found that among almost two dozen high-end items, 19 are cheaper here than in New York, based on Thursday’s exchange rate. Savings ranged from a few dollars to about $1,000 on a pair of Louboutin crystal-encrusted New Very Riche Strass stilettos. Other bargains included Ferragamo ties, Tiffany watches, Prada wallets and Louis Vuitton purses.

So, head to Brazil for the beaches, the nightlife, the upcoming Olympics and, if you can't wait until next year, the luxury shopping. Tell the Brazilian boutiques that Emmanuel of the IPE Zone sent you (dahling), although I can only guess what their reaction will be.