Sunday 13 January 2013

New Price Standards For Major Retailers

Major retailers like Myer and David Jones are acutely aware of the price transparency created by our digital age and they are making changes to accommodate the new standards. 

Products with global exposure are coming down in price as consumers search the globe for the best deal. Put simply, our major retailers are refusing to stock lines if they can’t get within 20% of the worldwide price. The days of suppliers seeing Australia as a cash cow with consumers prepared to pay above the odds, appear to have gone.

The process is called “price harmonisation” which is another way of saying that department stores are insisting that suppliers introduce pricing arrangements that allow local retailers to compete with their online competitors. Australian consumers prefer to buy online from Australian companies and are prepared to wear price differences between 10% and 20%, but not more.

The old retail structure in Australia allowed high margin sales. Changing that structure to allow competition is causing real headaches for all retailers.