Tips for Travel and Customs While Shopping Abroad: Gucci Case Study With Detailed Handbag Math

We’ve officially entered summer, which is the prime season for travel and shopping escapades. PurseBop will continue to be your number one resource for news on price savings abroad and general travel tips. (Read: Travel Guide 2017: Do’s and Don’ts) Better yet, we have implemented a “Guides” category with specific sections on “Travel” and “Handbag Math”. Be sure to explore these guides for even more information.

To inspire your travel lust, we have a new narrative from our dear friend, Dream, whom we call the “Traveling Shopping Diva”. Recently, she reported the price savings from the Chanel Gabrielle bag she purchased in Barcelona  this year. (Read: The Chanel Gabrielle Bag Case Study) Today, she’s sharing her Gucci haul from Italy to show us the kind of discounts you can expect from buying Gucci abroad, along with her experiences with the VAT refund and Customs processes.

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Dream’s time in Italy was nothing short of fabulous. Although the memories from her family vacation were her most valuable souvenir, she was quite excited about leaving Europe with some new Gucci goodies. At the Gucci stores in Milan and Florence, Dream browsed many of the trendy Gucci styles such as the Dionysus and the Marmont while sipping on champagne. Dream’s curiosity about Gucci spiked ever since the brand changed their game under new creative director Alessandro Michele (Read: Gucci – Most Improved Player of the Year?)

After much debating, Dream walked away with the following styles:

  1. Gucci Embroidered Dionysus Shoulder Bag
  2. Gucci Dionysus Blooms Print Mini Chain Bag
  3. Gucci High Heel Slides in Gold

Now, to the handbag math…Case studies of individual purchases are the best way to understand the ever-shifting fashion and luxury market. Below we will track the prices of Dream’s Gucci purchases in USD versus Euro, and also calculate the VAT refund and Duty taxes to see how much Dream really saved. Let’s take a look at the financial breakdown.

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Gucci Dionysus Embroidered Shoulder Bag

RegionGucci Dionysus
US$3,600
Europe€2,980
VAT Refund (approx. 12.5%)- €372.50
Cost After VAT€2,607.50
USD Equivalent$2,918.71
Duty Tax (approx. 4%)+ $116.75
Total Cost$3,035.46
US Price ($3,600) + Tax (approx. 10.25%)$3,969
Comparison Savings$934 (~24%)

*Estimated duty tax is 4% – individual cases may vary.

*Usually we calculate VAT at around 10%. However, VAT for Dream was 12.5% as she chose the cash back option at the VAT kiosk. Nominal VAT refund service fees are applicable at kiosks.

Gucci Dionysus Blooms Mini Chain Bag

RegionGucci Mini Chain Bag
US$1,350
Europe€950
VAT Refund (approx. 12.5%)- €118.75
Cost After VAT€831.25
USD Equivalent$930.46
Duty Tax (approx. 4%)+ $37.22
Total Cost$967.68
US Price ($1,350) + Tax (approx. 10.25%)$1,488.38
Comparison Savings$520.70 (~35%)

*Estimated duty tax is 4% – individual cases may vary.

*Usually we calculate VAT at around 10%. However, VAT for Dream was 12.5% as she chose the cash back option at the VAT kiosk. Nominal VAT refund service fees are applicable at kiosks.

Gucci High Heel Slides

RegionGucci High Heel Slides
US$795
Europe€690
VAT Refund (approx. 12.5%)- €86.25
Cost After VAT€603.75
USD Equivalent$675.81
Duty Tax (approx. 4%)+ $27.03
Total Cost$702.84
US Price ($795) + Tax (approx. 10.25%)$876.49
Comparison Savings$173.65 (~20%)

*Estimated duty tax is 4% – individual cases may vary.

*Usually we calculate VAT at around 10%. However, VAT for Dream was 12.5% as she chose the cash back option at the VAT kiosk. Nominal VAT refund service fees are applicable at kiosks.

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Reasons Behind the Savings

#1 Despite globalization, currency like the euro is still weak and continues to undergo devaluation.
Depending on where you are visiting from, you still can relatively “benefit” from the weakened currency in Europe or save more than you would if you were shopping at home since buying imports is more expensive. Although Gucci hasn’t exactly introduced a global pricing scheme like Chanel, Gucci prices are still more harmonized or equal across countries compared to other brands.  However, buying Gucci in Europe still tends to be less expensive because it is a European brand.

#2 Since Dream is not a European citizen, she is entitled to a VAT refund, which contributes to the majority of her savings.
VAT stands for ‘Value Added Tax’. It is a consumption tax levied on goods and services. If you are a “visitor” or any person who lives permanently or habitually outside the EU, you may be eligible  to shop free of VAT at certain stores. Since VAT is already calculated into the cost of the item, you receive this refund after making your purchase. To read more about the process, consult our guide: How it Works: VAT Refund and Custom DutiesWhen purchasing high-priced, luxury items, the percentage refunded can result in a significant savings.

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Comparing Savings: Gucci vs. Chanel vs. Hermes

How does the savings from Gucci compare to other designer brands such as Chanel and Hermès?

Firstly, fashion houses have different ways of coping with and reacting to currency fluctuations. In recent times, Chanel has raised prices in Europe to compensate for the weakened euro, which tends to slightly decrease the savings for shoppers who buy abroad. (Read: Chanel Increases Prices in Europe 2017) Hermès in the past stated that they would not raise prices in Europe in response to currency woes as it would potentially alienate their European domestic market. (Read: Hermes Declines to Follow Chanel’s Lead) However, Hermès still implements annual price increases every so often on pieces like Birkin and Kelly. (Read: Hermes Increases Prices 2017)

Potential savings abroad will mostly depend on how well different currencies fair in the market. For now based off our handbag math case studies such as Dream’s Chanel Gabrielle Bag and Dream’s trip to Hermès Paris, we are seeing the following savings on average taking into account US vs. Europe prices, VAT refunds, and Duty taxes:

  • Gucci about 25% savings
  • Chanel about 20% savings
  • Hermès about 35% savings

Again, these numbers are just general estimates and will vary by item.

Important Customs and Duty Things to Consider When Traveling

IMPORTANT: Coming into the US, Dream declared all her items. We reported the news recently on BopTalk about the changes being experienced upon arrival into the US after traveling (Read: VAT, Duty, and Customs 2017 – Declare Your Purchases). There is clearly “customs crackdown” on the rise! Many travelers are reporting their unfortunate experiences when not offering full disclosure about their purchases upon arrival. We personally know of several cases of Global Entry being revoked. There is a a direct link between VAT services and customs, and we want to urge you to declare everything and pay the nominal 3% – 4% duty tax that is charged after arrival.

To give you a better idea of how the whole Custom process works, Dream shared her recent experience of arriving in the US after her Italy trip. You can read the full story on the BopTalk thread, but here are a few important takeaways:

  1. Dream was traveling with her family (a four person party) and was very vigilant before arriving to the airport. She placed everyone’s purchases in one suitcase and organized all the receipts. After landing back in the US, a customers officer matched up each item to the receipts. Despite Dream’s consolidation into one suitcase, the officer still searched all the other luggage from the family to find items that might not have been reported. This whole process took 1 hour.
  2. Dream made a slight mistake. Originally, she only had her husband declare all the purchases in the one suitcase, while everyone else filled out “NO” purchases to declare on their forms. However, the custom officer advised her to split up purchases by person and have everyone fill out “YES” to declaration on their individual form according to purchases from each passport.
  3. Another tip: calculate the total amount spent for all your purchases bought abroad – not just the VAT refund eligible items. Non-declared items could result in a penalty. Officers expect complete transparency.
  4. Officers also questioned other luxury items in the suitcase that were not purchased on this trip. For the future, officers suggested that travelers digitally log their receipts or keep photographs documenting when/where their items were purchased to help establish a timeline.
  5. The best way to avoid conflict and be efficient is to stay organized and fill out the forms to your best abilities. REMINDER: Even travelers with connections are subject to lengthy searches, so take this into account. Although these officers were courteous and friendly, the process is extremely thorough, and you are ultimately subject to the laws in place.
  6. It is best for the person whose passport was used for the purchase to collect the VAT refund. The VAT kiosk will not dispense funds to anyone else.