Zara Australia has got everyone talking, from happy shoppers to not that happy peers, as the Inditex flagship brand has assured it would not raise prices to counter the impact of the weaker national currency.
"Inditex has a stable pricing policy," a Zara Australia spokeswoman said. "We aim to offer fashionable products with high quality at affordable prices and look at all of our markets over the long term."
As recalled by national media, the Australian dollar has fallen to about 78 US dollar cent from 94 US dollar cents it was trading at in early September. On Tuesday, the Australian dollar took a deep dive after the Reserve Bank of Australia cut rates for the first time in 18 months.
Global chains such as Uniqlo, H&M and newcomer Forever 21 are likely to follow Zara's lead, as multinational retailers are better placed to subsidise rising costs in one market from higher earnings in other markets.
"The big area of debate is how big the price increases will be and what the internationals will do," said one retail analyst quoted by the ‘Sidney Morning Herald’. The same expert adds that "If the local price rises are too aggressive the price gap (between domestic and global retailers) will widen."
Australian media explain that there is not as much pressure on the international chains because they can afford to subsidise across markets as they build brand awareness.