Monthly Archives: August 2011

Flawed pricing – what Adidas and Borders NZ have in common

The hotly anticipated 2011 Adidas All Blacks jersey turned sour for fans when they realised they would have to fork out $220 kiwi dollars for it. This flawed pricing strategy is not unique in New Zealand.

Consumers have no obligations to buy a rugby jersey at double the price they can get it online from UK and US stores. Adidas are dreaming if they think NZ consumers are dumb enough to pay exorbitant prices for a jersey they can buy for a price somewhat less than than their rent for the week.

Just ask the owners who led Whitcoulls and Borders into financial strife. I have only ever bought a book from Borders in New Zealand when it was heavily reduced in price. I refuse to buy an average sized book for more than $30. Many new release books are $40+. I’m quite happy to wait a few more days and get the same book from Amazon for $15-$20. With exchange rates in our favour, why wouldn’t consumers look online first?

Rugbystore.co.uk lists the 2011 All Blacks jersey at £64.99, which works out to be $NZ126 at the time of writing. Worldrugbyshop.com has it at $US89.99 (about $NZ105). Throw in a bit extra for shipping and you have your jersey at around 50% discount to what you can buy it here.

“If we continue to encourage people to purchase products overseas all that’s going to happen is New Zealand retailing will fall apart.” – David Hugget, Adidas NZ (NZ Herald)

The idea that we, the consumers would be somehow responsible for a decline in NZ retailing because we are unwilling to pay ridiculous prices for products, is simply flabergasting. If YOU – Adidas – price a jersey at excessive prices don’t blame us for buying from abroad and “causing NZ retailing to fall apart”.

I’ve never been to a store and paid more for a product out of some gesture of charity to a retailer. And I bet the owners of those retail outlets don’t buy from importers and suppliers that are going to charge them more than the guy 50m down the docks.

I do feel for retailers like Rebel Sport. They are at the end of the supply chain and so have to absorb all the costs along the way. The final price of the jersey, however, makes one wonder whether they’re made from super-strength carbon nano-fibres.

I admit there are a number of factors at play here – 15% GST, exchange rate volatility and higher fuel prices. But this price creep in All Blacks merchandise has been gradually getting worse over the past few years and I doubt that can all be attributed to external factors (some of which are favourable to importers). All Blacks training jersies I took a shine to last year were priced at about $NZ175.

Adidas – in true corporate spirit worsened their greedy image by revealing that the company is seeking to block cheap imports wherever it can. Wait a go guys – don’t cut the price to a more reasonable level for the average consumer – put it further out of reach.

I listened to Rebel Sport managing director Rod Duke on Radio ZB express his dismay at the unenvious position Rebel Sport and other retailers have been forced into by Adidas over the price of the ABs jersey. Duke says he will be holding some tough conversations with Adidas about pricing, where he will ask – “What the F@#k?” or something to that effect.

Whitcoulls, Borders, Adidas (I’m sure there are others) have perplexing pricing strategies. JB Hi-Fi singlehandedly killed DVD and CD sales in Borders on Auckland’s Queen Street and online stores are attracting armies of followers. Such is the evolution arms race in market economics – evolve or die and leave the excessive greed to the Gordon Geckos of the world.

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