July 14, 2008
High-End Retailers That Thrive on Imports Shift Strategies As Dollar Struggles
By Allison Ross, The Palm Beach Post, Fla.
Jul. 14--C'est Si Bon Gourmet Shop has made some changes to its inventory.With a weak U.S. dollar and rising gas prices, the European luxury food items offered at Aris Voyer's little shop have become extravagances he cannot always afford.
So he's made some switches, such as replacing some of his European caviar with a cheaper American-farmed product.
And getting rid of some of the more expensive Italian and French confections he used to keep in stock.
"The strong euro, it makes the European products much more expensive," Voyer said. "In my store, 50 percent of my items are usually European. It's maybe 20 percent now." Over the years, a growing number of American consumers have developed a taste for the good life, buying more imported clothes and foods from Europe as they've felt more wealthy.
That was certainly true during the housing boom years here, as local specialty, or luxe, retailers such as C'est Si Bon were joined by the likes of Tiffany's, Coco Chanel and Nordstrom.
But with the housing bust reducing that wealth factor, rising fuel prices increasing the cost of overseas transportation and a U.S. dollar that has fallen about 14 percent compared with the euro over the past year, many American shoppers are less willing to squeeze into the latest Manolo Blahnik shoes.
Area luxury goods merchants are using different strategies to cope with the price hikes.
Some are cutting back on the number of high-end products they are importing, while others are replacing expensive imports with domestic specialty goods.
Still other retailers are raising prices in the hopes that consumers will understand and still be willing to shell out the money.
As desperate as that strategy sounds, it's not surprising, given that imported products account for 30 percent of the $48 billion U.S. specialty foods retail industry, making it more susceptible to the weak dollar-to-euro ratio, said Ron Tanner, a spokesman for the National Association for the Specialty Food Trade.
"Olive oils, cheeses, pastas, they're all coming in at a much higher price than they used to," Tanner said. "So in some cases, sales have been down." Nationally, the volume of sparkling wines imported from Europe has fallen nearly 15 percent this year, according to Census Bureau data.
Imported chocolates from Europe dipped about 21 percent, while imported Swiss cheese is down about 15 percent and imported leather shoes 32 percent.
Tanner added that merchants in the specialty food business have been working to negotiate with European suppliers and have been buying in advance whenever possible.
Gourmet food store Market Salamander in Palm Beach said it has had to make some major changes as the prices on its invoices continue to rise.
"The American importer is paying the price," purchasing director Maude Eaton said. "The dollar is good for the exporter there in Europe, but it costs more for the importer to bring things in." Eaton said she had to raise the price of the buffalo mozzarella she imports from Campania, Italy, by $2 per ball a month ago after seeing that her distributor had raised its costs by $6. And she is sharing the $8 mark-up on the popular handmade Italian burrata cheese she carries by adding $4 to the price of each ball.
Other products also have gone up in price. She has passed some of those costs on to her customers, but she is absorbing many herself.
"It doesn't make sense to put the price way up on my burrata and then have it just sit there and go bad," Eaton said.
Domestic distributors and luxury exporters in other countries are taking advantage of the expense of European imported goods to get their products on retailers' shelves.
Miami-based Marky's Caviar, one of the nation's leading caviar merchants and a major importer of luxury gourmet foods, said it has turned to offering more domestic products because they are a fraction of the cost of imported luxury goods.
"Pate, that is a traditionally French recipe," said Moshe Cohen, Marky's director of sales. "A few years ago, 70 percent of what we sold was French. Today, almost all our pate -- maybe 95 percent -- is American." Marky's also has made headlines in recent years by importing live beluga, osetra and sevruga sturgeon from Russia in hopes of someday being able to offer Caspian sea caviar made in the United States.
Though it was a controversial move, Cohen said it was smart because the price of imported caviar has increased 40 percent every year in the last several years.
"Prices have been continuously soaring for caviar," Cohen said. "We are building our own American solution to it." And Market Salamander's wine section, which has seen a 40 percent mark-up on some of its European wines, has been opting for more wines from Australia and New Zealand as well as domestics, manager Jake Card said.
"The euro is beating the dollar badly," Card said.
He added: "I'm looking to other parts of the world to get quality wines from."
Food is not the only luxury import item to be affected by the weak dollar and a sluggish economy.
Shoe Spa, a high-end shoe store in Boca Raton, has had to increase prices on its imported shoes by as much as 10 percent and has begun looking for more medium-priced shoes to stock its store shelves instead of pricier styles.
Retailers say they must be careful about how much they raise their prices, however, because even wealthy customers have a limit to how much they will pay for an item that was considerably cheaper only a few months before.
C'est Si Bon's Voyer said most of his customers have been understanding of his price increases, but added that when they "see something that was $10 (that) is now $18, it seems outrageous." Boca Raton store Guy La Ferrera, which specializes in Italian men's clothing, said it has seen a 20 percent slowdown in sales as people can't afford to buy imported luxury suits.
Manager Yvonne Swords said that with the U.S. economy slumping and the price of the euro rising, her store will have to raise prices with the coming clothing season.
She hopes her customers will be understanding.
"We have a high-end clientele, but it doesn't matter who you are," Swords said. "Everyone is watching what they spend."
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