According to Gerry Harvey, retail prices are about to soar as a result of the falling Aussie dollar, but Ruslan Kogan says Harvey is just whinging.
Harvey Norman’s chairman says retailers will be forced to hike prices on imported goods by up to 10% in the next three months on the back of the dollar’s fall.
“We’re negotiating with manufacturers as we speak,” Harvey told Fairfax. “Our prices will go up. Everyone’s will.”
Harvey said if the dollar dropped below 80 cents compared with the US dollar, consumers should expect a 25% increase.
“Suppliers will either move fast or hold out on raising their prices, but regardless, if the dollar goes down, the prices of all imported appliances will go up,” he said.
But Ruslan Kogan, owner and founder of online retailer Kogan.com, told SmartCompany Harvey’s comments are just “attempted fear-mongering” and simply not true.
“It makes a difference, but it doesn’t make the difference that he describes,” Kogan says.
“That’s just not right because we have seen the dollar go down by 10% over the last year and our prices haven’t gone up.
Kogan says if the dollar was stronger at $1.05 his prices would be even cheaper, but says, in electronics, they are never going to go up as technology manufacturing is getting smarter and more efficient.
“The only thing that might go up is clothing and furniture; anything technology related is always going to be cheaper,” he says.
“Prices for technology will always drop faster than any currency movement.”
Kogan says when the Australian dollar is high, Harvey whinges that people are buying too much from overseas and when it plunges he whinges that prices will go up.
“No matter what the Aussie dollar does there is something for him to whinge about,” he says.
“I think Harvey Norman is looking at some dismal numbers to end the 2013 financial year and this is an attempt at urging people to buy something at his stores before June 30.”
Jim Vrondas, OzForex’s currency and payments strategist, told SmartCompany a number of factors influence the cost of imported goods and the exchange rate is a main influence.
“I do think there will be some price pressures for retailers, but it might not feed through immediately to prices right now as many retailers place forward orders and lock in exchange rates well in advance,” he says,
“A low Aussie dollar can benefit manufacturers and the tourism industry, but retailers who are already doing it tough will probably face another obstacle in terms of the Aussie dollar.”
SmartCompany contacted Gerry Harvey for comment but he did not respond prior to publication.