For a company that has made a fortune from the worldwide popularity of its sportswear, adidas displays a quaint naivety about one of the consequences of globalisation. It seems barely to acknowledge that modern technology means consumers can easily compare the cost of its products in other countries. Or that it should have a credible explanation when All Black jerseys which sell for $220 in New Zealand can be bought for $104 in the United States and $122 in Britain. Its failure to do so has, with good reason, alienated local consumers and retailers.
Twenty years ago, few would have considered the present scenario odd. Product costs reflected the demand in a particular market and what that market would tolerate. A replica All Black jersey would have a higher price tag here because the demand was much greater than overseas, where the potential market was a relatively small number of rugby followers. Conversely, a historic map of New Zealand, say, would sell for far less in Britain than it would at home.
Online shopping has changed much of that. The world that adidas helped to shape is one marketplace. It is now common for New Zealanders to buy goods through the internet, especially easy-to-ship items such as books and DVDs. The recent strength of the New Zealand dollar has only added to the attractiveness of the practice. Unsurprisingly, people who blanched at what was being charged for an All Black jersey in local shops were quick to seek online options.
Adidas' response to the subsequent deluge of criticism has mixed unconvincing excuses with an unseemly effort to plug the dyke. It has talked of currency fluctuations to account for the disparity. If anything, the movement in recent times should have made the jerseys relatively cheaper here. It has also pointed to a "cross-border agreement" designed to stop an American retailer, worldrugbyshop.com, selling merchandise outside the US.
Disappointingly, that retailer has now removed New Zealand from its list of shipping destinations. For the meantime, adidas has sealed one breach. But its efforts will, ultimately, be futile. Online shopping is something that manufacturers and local retailers must live with and adapt to. Adidas should appreciate this more than most, as globalisation and free trade have underpinned its dramatic growth. Cross-border agreements and the like fly in the face of everything for which it should stand.
Another tack pursued by adidas was that it was somehow protecting New Zealand retailing. It would fall apart if people were encouraged to buy products overseas, said its New Zealand manager. The singular failure of this exhortation was emphasised by the commendably strong criticism of adidas by Rod Duke, the general manager of Rebel Sport, the country's largest sports retailer. He, like all retailers, had every right to feel embarrassed by the revelations. Rebel, he said, had only a slim 7 per cent mark-up on its stock. This pointed the blame directly at adidas.
Doubtless, retailers also feel somewhat threatened by this episode. Once again, it has drawn attention to the benefits of online shopping. The Retailers Association has suggested that, for the benefit of the 325,000 employed in retailing, GST should be charged on privately imported goods. But there is no way Inland Revenue could collect GST with sufficient ease and efficiency to make it worthwhile.
Retailers should be looking to customer service as their best counter to online shopping. Adidas, for its part, should recognise that limits on pricing are as much a product of the global marketplace as increased opportunities.