Brand variety on the high street

By Olivia Pembrooke Business reporter, BBC News

Shoppers are facing shortages in the variety of available electronics brands

Industry forecasts shows US retailers offer a wider choice of electronics while there is a lack of choice on the UK high street.

British consumers pay 51% more on average while making purchases than what Americans pay for similar products, a survey conducted by Business Age.

Although the survey was conducted on general items, it did reveal that electronics also fall in the same category. Some of the electronic items examined in the research include smart phones, tablets, laptops, gaming consoles and e-readers.

However, a group of market analysts, including Euromonitor, have come forward to state that the sticker prices in the US are not the actual prices – once the local and state taxes are added, the prices between these two countries do not have a greater disparity.

Sticker prices

In a bid to prove this claim, Richard Weldon, the lead market researcher at UK based wholesaler beddistock.co.uk led a wholesale price comparison research for five different products in 4 shops; 2 in UK and 2 in US.

Weldon says that for the comparison to be unprejudiced, local and state taxes wherever applicable were included in sticker prices. He said that “Since these two taxes vary from state to state, we requested for no tax bargains and just used what was provided.”

He goes on to say that “From our findings, whether sales taxes are included or not, consumers in UK have to go deeper into their pockets each time, paying up to 51% more.

All the products compared in our research turned out to be cheaper in the US, and some by a greater margin.” He added that, “The disparities in the prices are actually down to the pricing of manufacturers rather than taxes and foreign exchange rates.”

I know people who have travelled abroad just to gain access to a wider variety of electronics brands. Laurent Zarmann, International research consultant

Transportation

Several companies have come forth to explain the differences in prices.

Senior analyst at Planet Retail, Robin Gibb says that major factors contributing to the great prices of electronics in UK are tax and import tariffs. British consumers have to pay an inclusive Value Added Tax of 20%.

Gibb also commented on the import tariffs, saying that UK levy taxes on certain items while others are exempted. Consumer electronics are in the exemption category. The final prices of consumer electronics such as mobile phones, laptops and gaming consoles are not affected by Customs Duty.

However, representatives of the UK based electronic wholesaler feel that this is not enough to help reduce consumer electronic prices. Weldon Richards added that the overall wholesale import prices have continued to increase by 11.1% despite the exemption of consumer electronic products from Customs Duty.

He says that, “Considering the exchange rates, companies are justified in their bid to protect themselves from the falling foreign currencies. This may partly explain the cause of higher prices in the country as far as most of the leading manufacturers based in the US are concerned.”

Its important we have access to branded products offering the latest features Bernard Miller, UK Technology Association

Some companies have attributed the disparities in prices to the cost of running business in UK.

According to Malcolm Horn, head of Sony PR in UK, “it’s cheaper to carry out business in US than in UK.” But Robert Lawson, a professor at Bath School of Management has a different perspective regarding this. He says that “a heavy TV set would cost less to transport to a UK shop from a Chinese factory, that simply mean that transporting smaller gaming consoles would cost about 50% of the expense.

This clearly shows that the difference in the transportation cost isn’t a reason enough for the extortionate prices of electronics on our end.”

An alternative outlook?

On other hand, the imports into China have recorded drops for the 12th month in a row, raising further concerns about the Chinese economy. China recorded a decline in its imports by 17.7% in last year.

According to a HSBC analyst, Michael Goad, the slowdown in China’s economy is taking place at a faster rate than anticipated. He says that “It actually begun during the last quarter of 2014 and by July this year, semiconductor manufactures realised that they were trading in excess inventory.” From his statement, it seems as if electronic industries in the country are also affected.

As the country moves from an export dependent to a consumer-led economy, Exane BNP Paribas analyst, Catherine Keeling points out that new potential issues are arising from it. He says that “the most important aspect of risk for consumer goods in our own view is that of declining import duties getting replaced by the higher taxes. This could mean that imports from China to consumers in UK is likely to decrease. ”

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