Prices starting to increase… still some special offers left.. but the next 12 months is looking expensive!
Since September 2008 there has been a huge fall in the value of Sterling on the international markets. While the Dollar and Euro remain strong the British pound’s value has plummeted on the international markets, to the point at which £100 of equipment bought into the country is now costing £145. Most importers hedge currency, buying currency ahead of time to minimise the volatility fluctuations and this helps keep the importers in business with steady trading conditions, ironing out the bumps and keeping retail prices constant. Most importers will only be able to hedge (or book currency) up to 12 months in advance, and now that they have used this all up since September they now have no choice but to pay the higher price.
There is also a significant rise in the raw cost of goods from the factories in China as workers now have union rights and are forcing more wages out of factory owners, as well as increased raw material and transport costs.
This is somewhat of a double whammy, and what it means for Surfstore and yourselves is that prices are starting to go up. We have some stock here that was bought before the price rises and this will remain at the set price, but steadily, as this stock is sold through, prices will start to rise. We have previously never seen mid season price changes, but for the first time in 15 years it is starting to happen. Pryde group UK will set new retail prices on the 1st of Febuary.. we have the new prices here, and we expect all major manufacturers to follow.
As a rule, all boards are bought in Euro’s and all sails and kites in US Dollar. Although the Pound fell marginally against the euro all last year (previous high was 1.45 – we saw some board price increases in October time) it has recently fallen badly, and we expect board prices to rise once stock sells through. The Sails are all starting to go up now, as you can see by the price difference from the UK£ to the Dollar graph, as importers have been buying at poor echange rates for a while now.
To put this in perspective, the worlds most popular kite board is the Nobile 555, who’s name is it’s price in euros. In summer 2008 during sterling’s peak, this board retailed for £399, which at an exchange rate of 1.45 actually equated to £383, so it was £17 cheaper in Europe. At today’s exchange rate the same board should now cost £533, £134 cheaper in the UK than buying one in Europe, as the euro is now almost at parity with the pound.
Have a look at the following costings; we have been tracking average europen prices;
These are current average prices for 10m kites in Europe at today’s exchange rate..;
Bandit II £1265
Cabrinha SB £1189
These are a great deal higher than the UK… Many brands are trying to keep their prices down to sell through the stock they have already made, as opposed to selling them off at the end of the year, but when this is done these prices are coming to the UK.. we have no idea when…
If you are planning on buying a set of kit for 2009 then it will most certainly be cheaper to do it sooner rather than later…. as we don’t expect the exchange rates to sort themselves out any time soon… we have been waiting for 6 months and there is no sign of a reversal at all, infact the graphs are quite horrific.
We will be looking for as many ways around this as we can with offer and sales equipment, but it won’t last forever, and this is the current situation as it stands. It’s not only water sports that will see this, it’s all consumer goods traded in the Dollar and Euro, which is mostly everything… Its the USD and Euro that are the currencies used to buy the raw materials, hence to fix factory production cost fluctuations.
Enclosed are the graphs of the dollar and euro, plotted against the uk pound; you can see the pounds value falling away…