Importers get an early Christmas present as Australian dollar hits US90c

Retailers are taking advantage of the strength of the Australian dollar, which surged overnight to a 14-month high of US90c after yesterday’s announcement unemployment fell to just 5.7%.

Gabby Leibovich, chief executive of online retailer Catch of the Day, says the rising Australian dollar is good news for retailers putting more emphasis on importing.

“Last year we imported about 5% of our goods, and we’ve realised that isn’t good enough because the quantities we are filling every day can’t be met with Australian suppliers. We can’t keep up with the demand, so we have decided to get stronger into importing, and the stronger the Australian dollar the easier it makes it for us.

Leibovich also says the rising dollar would have benefits for retailers stocking up before Christmas, saying “for them…it’s a good opportunity”.

Hal Pritchard, chief executive of online kitchenware retailer Everton Online, says his business will benefit as the higher dollar puts downward pressure on prices.

“The financial crisis wrecked havoc for us because all of our suppliers in Australia, which also import, put prices up as the dollar fell. So we’re starting to see a lot of price drops coming because the dollar is now going up again.”

But while Pritchard says retailers may be wise to stock up on inventory while prices are cheap, he warns businesses getting ready for Christmas may have missed the best opportunities.

“There is an opportunity but if you haven’t stocked up yet you’re already in trouble. You need to now stock up for New Year sales and that sort of thing, because prices are cheap, but Christmas is probably too late now.”

Retail analyst Rob Lake says that Christmas starts in about two weeks for retailers, and that there is “minimal benefit” in the short term for retailers.

“In the long-term it means effective buying prices will be lower, but right now there won’t be a huge difference because larger retailers already have most of their stock held up in warehouses.”

But Ruslan Kogan, chief executive of online retailer Kogan Technologies, says he is able to take advantage of the higher dollar instantly due to the structure of his business model.

“We are able to move our products from China to our warehouses in three weeks or so, so we are able to get stock in much faster than some of the bigger retailers. Consumers need to look at is which companies can provide the cheapest prices the fastest as a result of the dollar. The bigger brands may have stock housed up for a few months, but other retailers have a model that will allow them to turn stock over much faster.”

Leibovich says his business model allows stock imported from overseas to be sold within days, and as a result he is not worried about stocking up for Christmas. Instead, he says he prefers to deliver cheaper prices instantly over the internet.

“Importing is so simple now, we can get our goods within days and sell them on again to the consumer, so we are looking at getting into importing a little more because of that, which will make up about 10-20% of all our goods.”