Welcome to the highs and lows of retail.
As many brands and retailers would be so fully aware of, the currency roller coaster ride has the power to make or break our businesses.
When importing merchandise is a big part of what you do, those salad days when the dollar is strong against other currencies makes you feel like you’re on track to become the next Amazon.
Then our little kangaroo-currency takes a tumble and you’re faced with making cutbacks or raising prices (which customers just looooove).
The goalposts never stop moving and it can be very frustrating.
What’s happening with the Aussie dollar?
As shared in the Sydney Morning Herald in October 2018, the Aussie dollar is “volatile”. Great.
According to Motley Fool’s GM Scott Phillips, “In the past thirty years, our currency has “bought both less than US60c and more than $US1.10. The same volatility is a feature of the exchange rate in pounds.”
We’re rich! We’re poor! And you never know what’s going to happen next.
This is thanks to a massive number of factors. For example, Inside Retail recently shared that in an effort to cut back on pollution, China has shut its dirtiest steel mills. This move has pushed up the price of steel and of the higher quality, and thus cleaner, iron ore that Australia produces — a good thing for our dollar.
We can be affected either negatively or positively by global share prices, economic performance in other markets, interest rates, commodity prices and the performances of currencies like the Yen and GBP (that’s Great British Pounds, which incidentally haven’t been all that ‘great’ lately).
And forecasts are revised constantly, so while experts love to predict where the dollar will be at six months or a year from now, nobody really has a crystal ball.
Yep, this makes retail a challenge.
What’s a brand manager to do?
If a key part of your role is sourcing merchandise produced overseas, you’ll be affected by currency and exchange rates. This can be particularly annoying when you go to place a re-order based on last year’s budget and get a big surprise because you’re faced with paying a chunk more cash.
While the rise and fall of currency is certainly not something we can control at Inck (imagine if we could… we’d be gazillionaires), there are ways price increases caused by exchange rates can be mitigated against. These can be put in place to protect you from bill shock, without compromising on quality or safety.
Want to know more about avoiding the pitfalls of a dollar plummet? Get in touch with the team at Inck.
