Retailers believe the decline in the Australian dollar to below parity will not stop the shift to offshore retailing, as price differences between products bought locally and sourced overseas remain too high to ignore.
However, currency experts suggest that while the Australian dollar will recover in the long-term, further market volatility could cause the currency to fall.
Brad Kitschke of the Fair Imports Alliance, one of many groups continuing to lobby the Productivity Commission over the GST-free import threshold issue, says despite the currency falling to $US0.97c, the “draw towards online retail is always going to be there”.
“It’s about price, but it’s also about range, accessibility of the product and various other things you can’t get into Australia.”
“Even with the dollar just below parity with the US, or other currencies, it still doesn’t take away the fact retailers here are paying more to import products and that is making them more expensive.”
The Australian dollar has fallen to a 10-month low of $US97c, after reaching $US1.08c last month. But while retailers may be hoping the currency falls even further, Kitschke points out this won’t be good news for importers.
“When wholesalers have to purchase products they need to speculate a fair bit, when they import a huge package of goods they have to do that. So there is a fair range of speculation that goes into the price.”
“When you purchase something directly from overseas you’re purchasing at the exchange rate, so there is always going to be a struggle to compete.”
Retailers have been saying since last year that the high dollar is causing more shoppers to look online for bargains, as items become much cheaper even after paying shipping costs. This was even brought up in the Productivity Commission’s recent draft on the state of the retail industry.
Commonwealth Bank currency strategist Joseph Capurso says the dollar will recover in the long-term, although does say that if volatility continues there is a chance the dollar could plummet, potentially causing shoppers to head back to local stores.
“One thing that you can be sure of is that there is going to be a lot of volatility, a lot of ups and downs in this market.”
“Companies that are involved in international trade have to be careful to manage their exposures to foreign currencies, rather than just flying by the seat of their pants.”
How the change in the Australian dollar affects the price of retail goods:
Local: Booktopia
Price: $15.95
Offshore: The Book Depository
Price at $US1.09c: $7.40 (53% cheaper than in Australia)
Price at $US0.97c: $8.22 (48%)
Local: JB Hi-Fi
Price: $109
Offshore: Amazon
Price at $US1.09c: $74.4 (31%)
Price at $US0.97c: $82.3 (25%)
Local: Fossil Australia store
Price: $279
Offshore: Fossil America Store
Price at $US1.09c: $156.24 (44%)
Price at $US0.97c: $173.04 (37%)
Local: Rebel Sport
Price: $159.99
Offshore: EastBay
Price at $US1.09c: $83.69 (47%)
Price at $US0.93c: $US92.6 (42%)
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
