Sterling plummets – but where are the savings for Irish consumers?
We should be benefiting from the exchange rate, but the mark-up on goods is still hefty
Oasis is selling its “button coat” for £100 in the UK, or €128 in Ireland – a differential of 15.4 per cent.
Sterling continued to slide early Monday morning, as fears about the impact of the UK’s exit from the European Union gather pace; but does this mean that Irish consumers are benefiting as UK retailers start to factor in the new exchange rates?
Unfortunately, it appears not. Despite the recent decline in the currency, Irish consumers are still paying considerably more than their peers across the Irish Sea for the same goods.
Indeed, the currency has fallen by almost 4 per cent against the euro since last Monday, and is now down by about 15 per cent since the day before the Brexit vote.
However, in a survey of 12 retailers, the differential in prices ranged from 3.8 per cent to 92 per cent across a range of products.
Amazon.co.uk was found to apply the lowest mark-up, with an exchange rate of €1.15212 for every £1, slightly ahead of the wholesale rate of €1.10951. This means that a hardback copy of Robert Harris’s new book Conclave, including delivery to Ireland, can be purchased for €18.40 in sterling, or €19.08 in euro – a mark-up of just 3.8 per cent.
But experiences differed considerably across other retailers, with substantial mark-ups elsewhere.
Boots has an offer which is sure to attract many Christmas shoppers in the shape of a Restore & Renew gift set – but it retails for £55 (€61) in the UK, compared with €74 in Ireland.
Of course, price differentials are not just down to a failure to pass on changing exchange rates to customers; other factors, such as transportation, VAT and excise, labour, commercial rents and energy charges, are also at play.
However, the scale of the differences will likely trouble Irish shoppers and could see more Irish consumers flee to the North in greater numbers, or shop on the UK version of retailers’ e-commerce sites, in order to benefit from the fall in the exchange rate. The latter, however, is not always easy to do; M&S, for example, won’t deliver to the Republic from its UK site, but you might be able to get around this by availing of a service such as Parcel Motel, which allows you purchase with a UK address and have them delivered to a collection point.
Retail Excellence Ireland CEO David Fitzsimons recently expressed concern that a falling sterling would motivate customers to either go online or to Northern Ireland.
If you shop online and are given the opportunity to pay in pounds rather than euro, bear in mind that unless your retailer is assiduously passing on exchange rate fluctuations, it’s likely that your shopping will be cheaper if you opt for the former.
The survey was conducted on Monday October 10th, and is based on a wholesale GBP/EUR exchange rate of 1.10951, obtained from oanda.com.