Expect to pay more for laptops as the rand weakens

 

The price of laptops in South Africa could rise as the rand continues to weaken against major international currencies, a retailer says

“The Notebook Company has been forced to up its prices this year. Due to the weakness of the rand against the dollar each shipment of computer goods needs to be considered to see if a price hike is required.  We don’t see the rand improving any time soon, so the prices of certain computer products will remain considerably higher than last year,” said Christopher Riley, CEO of The Notebook Company.

Riley added that the price of laptops and accessories had increased by 15% in recent years to make up for the falling local currency.

Over the past two years, the rand has depreciated from around R9.55/$1 to R11.94 on Monday. The price fluctuation hits retailers as most computer hardware in SA is imported.

“Some computer stock is flown in, and some is shipped in. When products are flown in, it is easy for vendors to adjust their prices timeously. But when they are shipped in the prices can be affected while the products are still at sea, meaning that computer vendors cannot always foresee higher costs,” Riley said.

He added that retailers often have to absorb squeezed profit margins as a result of these unforeseen price fluctuations.

“Vendors, in these instances, have to take a price knock until adjusting prices for the next shipment.”

The increase in price has seen sales stall as consumers decline to buy new laptops or delay purchases until the next version of Windows is officially launched.

The Notebook Company said that sales in the first three months of the year were flat compared to the same period in 2014. The depreciation has also had an impact on smartphone prices, forcing consumers to consider what they want versus what they can afford. Contract prices of premium phones have been trending upward from around R370 per month two years ago to around R500 this year.

“We do our best to mitigate against the weaker rand, primarily by leveraging Vodafone’s global purchasing strength. Having said that, any weakness in the rand does tend to translate into higher prices for the big name devices,” Vodacom executive head of media relations and social media Richard Boorman told Fin24recently.

But some manufacturers have seized the opportunity to offer lower-cost devices in an expanding mobile market. Companies like Huawei, Lenovo, Hisense and local player Mobicel have realised that cost is a major factor and market smartphones in SA directly at people who value affordability.

Data from the International Data Corporation (IDC) shows that smartphone growth hit a record 83% in the Middle East and Africa region, but price was a critical factor. Phones priced between $100 and $200 (R1 200 and R2 400) saw the largest surge in market share.

“Many new vendors have been eager to get into the region’s burgeoning smartphone space, with a number of them launching phones in this growing price band,” said Nabila Popal, IDC’s research manager for handsets and display solutions in the Middle East and Africa.