If you import goods for sale and the Aussie dollar drops, it is logical that the landed price will increase and thus affect profit margins and therefore your bottom line.
The three options available are change supplier to source cheaper goods (not always a good idea especially if what you bring in is a well-established, popular brand name), lower your costs somehow or raise prices.
Harvey Norman’s Gerry Harvey is urging other retailers to do the latter of the three.
In an interview with Business Spectator’s Robert Gottliebsen recently, when asked if this would increase his margins, he replied that it wouldn’t, but would increase his profit.
Harvey says that sales wouldn’t be affected as when people walk into his stores to buy a new refrigerator or lounge suite, they have no idea what a previous price would have been anyway.
Appliances don’t have the same competition pressures as other market areas such as automotive or the grocery sector with Woolworths, Coles and Aldi in a grim war for customers, and these companies are looking at actually lowering prices to compete.
