Don't bank on Aussie bargains

Last updated 05:00 02/02/2014

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Inflated prices on your favourite Australian clothing brands should be set to fall due to the strong New Zealand dollar. That's the theory anyway, but don't count on it, say experts.

Kiwis are currently paying as much as 30 per cent more for a pair of jeans or a dress in Australian-owned shops such as Country Road, Witchery, Jeanswest and Cotton On, despite the closing margin between our currencies.

The Sunday Star-Times found this week that items such as a A$100 pair of pants were likely to be at least NZ$120 - whereas if the prices were adjusted for current currency rates they should be expected to be more like $106.

The New Zealand dollar closed at more than 92 cents to the Australian this week.

Financial experts say while it's unfair to expect retailers to bring prices down straight away, consumers should rightly begin to expect price parity in the next six months.

"When currency moves it's not reflected in the price of goods straight away because companies hedge their currency rates in advance - kind of like setting a fixed mortgage rate," said ANZ senior foreign exchange strategist Sam Tuck.

Tuck said the past year's currency moves - from 80 cents in the dollar this time last year - were the fastest in its history and retailers would not have had time to adjust.

Hamilton Hindin Greene director Grant Williamson said because the retail market was competitive, it was logical to think brands would bring down prices to remain competitive.

"If there is benefit for retail I would expect to see it passed on," he said.

However, Retailer's Association spokesman Russell Sinclair said currency was unlikely to make a difference at all.

He said most clothing in Australian stores came straight from Asia, and relied more heavily on the US dollar as to pricing.

"Everyone has to price to their own market. And while the dollar hasn't been so strong there have been increases in things like wages and rent, so if the dollar is strong that might help retailers cover other costs."

He said there were many factors to consider in pricing differences.

A Country Road spokeswoman said their pricing was mainly determined by "competitive dynamics" not the exchange rate. She said there were also other factors like logistics and a higher GST rate. GST in Australia is 10 per cent compared to our 15 per cent.

Consumer NZ chief executive Sue Chetwin said while prices should come down, it was unlikely. "I think it's one of those ‘them's the breaks' situations," she said.

"It's probably better for Kiwis to take a nice holiday to Australia and buy the clothes there."

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- Sunday Star Times

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