Realigning prices

 I had intended on writing a short blog celebrating good news for Australian shoppers buying imported brands, not just motorcycle riders.

Two weeks ago I wrote a blog about the pricing differentials between key markets and Australia, looking specifically at higher value items that were becoming more widely available and more widely purchased online. I talked about outboard engines and forklifts, but didn’t mention car, bike and truck tyres. After I wrote the article, many readers made me aware of just how big the online tyre market has become.

But most clearly, I talked about Harley-Davidson’s model prices and the significant price differences on models and accessories between the US and Australia.

The number I quoted was a doubling of price on key models between AUS and the USA… same three letters and effectively the same currency. On a discount basis, that meant that Harley would need to discount its current Australian prices by around 45% to equate to American prices, allowing for genuine cost differences in freight cost to Australia, compliance costs relating to Australian road and import authorities and Australian taxes.

One week after I wrote the article, Harley-Davidson announced ‘Independence Day’ in full page ads across Australia. The ad showed a graph of the rising Australian Dollar and announced that the iconic brand would launch “significant savings” on new motorcycles, saying “all parts, accessories and clothing are now reduced by 17.5% period”. To see the full advertisement visit www.harley-davidson.com.
 
Now I don’t for a second believe that my blog had anything to do with this decision. The timing was just good!

Reading the ad I thought that Harley-Davidson and its dealer network had worked on the price review for several months, taking feedback from shoppers on dealerships’ floors and online discussion forums, as well as looking at declining sales.

It looked like they had taken the decision at the end of the financial year, when existing stock could be written down, allowing them to reinvest the currency gains they and every other manufacturer selling into Australia, has made over the past two years, to reposition prices.

Now 17.5% isn’t 45%, but it is a significant message to its dealers and shoppers that Harley-Davidson “get it” and are staying true to the brand promise.

However, when I visited a dealership over the weekend to see how it all panned out, I was met not by a 17.5% price drop on motor cycles. Nope, just a 17.5% drop on accessories, which can be easily bought online from the US.

The bikes? Well the Fat Boy Lo is still double the price here in Australia as in the US, though I believe they did drop the price by $2,000, around 6%. A couple of other bikes had had $500 to $1,000 knocked off their $15,000 to $30,000 price and some had not changed at all.

I had hoped that the large and respected Harley-Davidson company was signalling that it is committed to making this change. But it isn’t. It was good marketing though, because the dealership was buzzing with shoppers. Though, several customers like me were probably feeling a little frustrated after our one hour journey to the Independence Day event.

I wonder who will finally lead this realignment of prices, or who else has already started this realignment of prices?

In his role as CEO of CROSSMARK, Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores. In this insightful blog, Kevin covers retail news, ideas, companies and emerging opportunities in Australia, NZ, the US and Europe. His international career in sales and marketing has seen him responsible for business in over 40 countries, which has earned him grey hair and a wealth of expertise in international retailers and brands. CROSSMARK Asia Pacific is Australasia’s largest provider of retail marketing services, consulting to and servicing some of Australasia’s biggest retailers and manufacturers.