Rugby is a subject close to the hearts of Kiwis, and the media frenzy created by the ‘overpriced’ All Blacks Jerseys was a public relations disaster for Adidas. The media had a field-day with the notion that the very same All Blacks jersey could be purchased in the United States for half the price that patriotic Kiwis could purchase the jersey for on our shores.
Being an eCommerce guy I saw something entirely different in this whole circus. Globalisation has clearly become local.
The strong kiwi dollar didn’t help Adidas. Only three short years ago we were at 50 cents NZ$ to the US$ (I was in Denver at the time – lamenting at my $550-a-night hotel bill for something less than spectacular) and at the exact time of ‘Adida-gate’ we hit a high of 88 cents. If we were in 2008 and the difference in price had only been 20%, then the hassle and cost of shipping would have probably lessened the perceived ‘price hike’. But we now live in a ‘real-time’ world.
Adidas’ alleged attempts to block imports of the jerseys were pointless; anyone with a Visa can set up a U.S. postal address with many of the services now available like shipito.com and myus.com. Retailers in the US have no way of blocking sales that deliver on domestic soil – regardless if they are then swiftly repackaged and sent offshore. This fact is a grave concern to the movie and electronics industries that rely on the geographical distances to stagger pricing.
In fact, mobile phone companies often price their products not on what they are worth, but what the market can afford. Take a look at non-contract mobile phone prices (excluding Apple) in New Zealand and then compare them with those in Indonesia. The phones have different model numbers in an attempt to muddy the waters, but just looking at the picture and specs it becomes clear that they are same. Or try to order the latest blockbuster DVD off Amazon (one not yet in the cinemas here) and you’ll inevitably see the message ‘Sorry... we cannot ship to your chosen location’.
Due to the sheer volume of online shopping, many high fashion brands now consider the role of their high street store as being advertising and marketing rather than a viable retail outlet. Is it possible now that this premise is no longer the exclusive realm of Gucci and Prada?
In July this year the Sydney Morning Herald reported, "Premier Retail, the owner of major fashion brands Just Jeans, Jay Jays, Peter Alexander, Portmans and others, will close 50 loss-making stores and shed staff in a response to ‘challenging’ retail conditions.”
I can’t help but wonder if they will stay closed. For employment's sake I hope not, but it looks likely, given my Just Jeans now have a ‘Webstore Re-order Code’ sewn into them. It's clever, and a sign of the times.
Retail outlets that are self-branded (such as Portmans) probably have less exposure than named brands sold via retail stores. But in this market, it’s the retailers on the ground who will suffer. Do Adidas, Nike or even Gucci really care where you buy their products from? Be it high street, Amazon or even a bargain direct website – they are still selling after all. As the barriers to international trade come down and the savvy-ness of shoppers increases, how will a manufacturing business that doesn’t offer both dealer and public direct sales via the web will be able to survive, let alone thrive?
Brooke Anderson, is managing director of XM Developments (a Sage Software development partner). You can email him here, find out more about XM Developments here, or go here to check out Sage Business Solutions.