Is shopping in New Zealand a rip off?
Yesterday the NZ Herald made an interesting story on how Jeans in NZ were almost double the identical pair in the US. The asked the question is shopping in NZ a rip off?
They pointed out:
A pair of black Levi’s 501s for men cost up to $139.90 here but you can pick up the same pair in the United States for just $75.11.
Some of the explanations proposed by Shamubeel Eaqub, principal economist for the New Zealand Institute of Economic Research, were:
- “New Zealand is a smaller market,” he said.
- “You don’t have the same kind of volumes. It’s a very important driver for some of these retailers.
- “If you think about how many jeans you have to hold to service your customers it’s probably no different in Wellington as opposed to New York for a particular shop.
- “So, if you have far fewer customers going through because we have much smaller cities, it’s harder for them to make money on it.
- “The variety we have in New Zealand is a lot less than you would get in a slightly bigger market such as Australia.
- “You don’t get different lengths for jeans in New Zealand, whereas in America you can buy anything off the shelf and it will fit you perfectly.
- “But it makes sense – you’ve got so many people coming through, you can afford to have all the different sizes, whereas in New Zealand you can’t.
- “They’re much wealthier as well. They can afford to buy more things because they’ve got more income, they’re much richer than we are.
Unfortunately some of these just don’t stack up. For example, economics 101 would tell us that if the US market has wealthier customers (aka greater demand) this would push prices UP overseas, not down. Also the argument about having less variety in NZ (which is true btw) would also mean LOWER prices in NZ as they number of items held in stock is much lower, and what they do buy they buy in larger quantities.
Visiting rugby writer Peter Bills, also called New Zealand one giant rip-off.
While those words are rather strong, as a person who travels a lot overseas I have to say I rarely do shopping things in NZ now. This is due to both price and variety. This especially applies to clothes, and the more expensive the item, the more this applies. In fact I regularly buy Levis on special in the US for under $US 30 (so around $45 NZ) for the latest style. What’s worse (or better for me I guess) is Jeans like Calvin Klien are around the same price when on special, so rarely would I pay more than $US 50 ($NZ 75) for a pair of Calvin’s jeans, when they would be $200+ in NZ.
The argument about economy of scale just doesn’t wash with me. I could personally buy 40 pair of jeans in the US, bring it back in a suitcase, sell them for 100% mark up and STILL have made money on the trip to the US (and no I don’t do this). So if I can do it with such low economy of scale, AND I am buying them at retail prices (I hope NZ retailers get them for less that I can!), then it certainly shows its not just a volume thing that inflates the prices in NZ. I think volume and freight costs would allow for at most a 10% lift in prices in NZ, not the 200-300% that I often see.
Men’s underwear is another excellent example. Many designer labels are often $50+ in NZ, when I can get these for $US 10-12 ($NZ 15-18) easily. In fact I can buy them online at places like Freshpair for far less than I can in NZ, even including their fright costs. And of course the variety is MUCH MUCH greater. I even buy my black business socks in the US from a department store where I get them cheaper than the Warehouse, but at high quality (wool/cotton blends for under $3 a pair).
I have to agree think we are ripped off in NZ for shopping. Luckily for many items the internet (or the occasional overseas trip) means I can personally just buy them elsewhere, but for large items like cars, this is less practical and we are stuck with inflated prices (although I do know a business that survives by importing new cars from the UK for people who want them, saving both $ for the buyer, while still supporting the business to make its margin).
For those that are stuck in NZ – the internet is the best way to at least compare prices (so you know if you are paying a premium) and in many cases provide a way of buying things too. Check out my post on how to get good (safe) deals shopping for more details on this.
Black and White Version: In general shopping in NZ is a rip off. Luckily I can get around it for most things.
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