Strong dollar: slashed budgets

NATIONAL: Key international buyers have been forced to re-evaluate their budgets in a bid to cope with Australia's fluctuating dollar.

Delegates who attended Rosemount Australian Fashion Week (RAFW) this month expressed concern about budgeting for the spring/summer 2008 season, after the previous instalment saw their financial statements thrown into disarray.
UK buyer Lindy Lopes, who operates a specialty fashion store in London, said the exchange rate fluctuated sharply from the time she placed her order in April/May 2007 to the time it was delivered in-store.

Lopes said the GBP represented $A2.50 at the start of RAFW 2007 but fell to $A2.10 during the consumer selling season. Even on a conservative $A20,000 spending budget, the value of the order would have fluctuated by $A1629.47.

"This has not only thrown my budgets out but also meant that many labels have been priced out of the market which has reflected in their performance in store," she said. "There is the option of buying a currency in advance but unfortunately this ties up too much budget in the incorrect season."

Lopes, who stocks brands such as sass & bide, Thurley and Anna & Boy, has requested that designers price items in British Pounds or US Dollars to avoid further complications. She said she would also review the price of garments individually to see if they could perform at a recommended retail price up to 20 per cent higher than is costed using the current exchange rate.

"I have to be overly cautious [however] as the retail market is very competitive in the UK and our customers are extremely savvy," Lopes said. "We do have more of a budget for each brand we have the confidence to purchase in but will be buying fewer of them."

Australian Federal Government efforts to drive TCF export growth in the Indonesian market have also been hampered as a result of the strong domestic dollar. Austrade officials identified Indonesia as a prime target for designers at RAFW, however key buyers across Jakarta said they were forced to slash budgets to avoid the unfavourable exchange rate.

High-end fashion boutique Velvet, which focuses primarily on Australian designer fashion, confirmed it had reduced its RAFW spring/summer purchases by 30 per cent this year. The store stocks leading womenswear brands such as Ginger & Smart, Jayson Brunsdon, Melanie Cutfield and Mad Cortes. Owner Yana Handali said competition in the local market made it impossible to adjust the pricing of garments.

"Initially, Australian price points were very attractive when compared to the US or Europe," she said. "We were able to lure the customer based on [strong] designs at a lower price. Now with the price level on par, I feel that consumers will look for American or European brands which are more well known internationally."  

Funky Princess boutique owner Susan Whyte, who has been involved with Australian wholesalers for over 10 years, said the risk of outpricing herself in the local market was at an all time high.

"I do feel the dollar is a factor due to the mix of Australian and American products in store," she said. "It's essential to have the quality of garment relevant to the price and I can't afford to charge customers more for Australian fashion."
Whyte said subsidised export costs could potentially ease the burden on regional buyers. 

"For me, the main issue is export cost and local clearing charges so if companies could take this into consideration and provide terms and discounts, it would be incentive for buyers."

By Assia Benmedjdoub