We may all be ignoring the fact that prices of products are becoming more expensive as we all still want to continue to live our current lifestyle and buy those latest sexy high heels. Reality is, that pair of shoes already has a more expensive price tag than this time last year and will be even more expensive in six months time.
We have many International brands trading in our South African malls these days, and that is a good thing as we all want choice and to be in the position to buy from the best brands in the world. Unfortunately with the devaluation of the rand over the last few months, these brands will become much more expensive to buy from as new merchandise arrives in stores.
Lets take the Aldo shoe stores as an example. This is a Canadian company based in Montreal. The company has over 1,300 stores trading in most countries around the world. Some stores are corporate and are managed by Aldo, and others are franchise stores and are managed by a partner.
In South Africa, the stores are managed by a partner. Aldo’s buyers purchase the seasons shoes from the east and pay for them in dollars. They then inturn sell the shoes to the SA partner again in American dollars.
Last year if SA bought a pair of shoes from Aldo at $50 they would have paid Aldo +\- R500, mark them up and sold them to the SA consumer for R999. This year the same pair of shoes would cost the SA partner R650, and be sold for R1,299.
All this as a result of the rand devaluating from R10 to the dollar in 2014 to R13 to the dollar when the shoes were bought +\- four months ago. The problem is today the rand has gone to R16,50 so the next time SA buys the $50 shoes they will need to pay R825 and the cost to the consumer will be R1,599.
This is the reality of shopping at international stores, the price points are moving up faster than inflation which makes the item less affordable to the SA customer.
Not good news, but money makes the world go round!
Could be a good idea to buy now before new stocks arrive at the higher price points.
try and enjoy your shopping.