Storm over adidas' pricing of All Black jersey

New Zealand Rugby Union kit supplier and sponsor adidas has come under fire for the overpricing of the All Black jersey in the lead up to the 2011 Rugby World Cup.

Priced at a massive NZ$250 in many stores in New Zealand, those purchasing the Rugby World Cup replica All Black jersey on the internet from international (usually USA-based) online sports retailers have been able to do so for less than NZ$100 after currency conversion.

The difference in pricing emerged on social media, through Facebook pages such as 'Adidas All Black Jerseys Are a Rip-Off'.

When scrutinised by New Zealand media, adidas refused to change its pricing, even argueing that New Zealander's should loyalty to local retailers by buying locally while at the same time favouring its offshore retailers with significantly better wholesale pricing.

In response, leading retailer Rebel Sport New Zealand issued a press release in which they explained "(we) met with Adidas in an attempt to convince them to reduce the price down to a level below the online price.

"They point blank refused to reduce the price by even one cent."

Explaining the pricing, commentator Stephen Beath stated "it would not be unreasonable to assume local retailers were paying the equivalent of US$120 per jersey (with full recommended retail price at around NZ$250 including GST) while their online counterparts operating out of the USA were paying around US$50 (with no GST).

Beath suggested that "the raw cost of producing each jersey (design, fabric and manufacturing) would amount to around US$5 plus another $15 to $20 of license fees to the International Rugby Board and the NZRA. So adidas stood to make significant profits off each jersey sold to a New Zealand retailer (roughly US$100 per unit) while more traditional margins of US$25 could be achieved through sales to other regions such as the USA. "

Questioning adidas' approach, Beath suggested the sporting product giant had ignored marketing fundamentals and "ignoried one of the fundamental aspects of modern marketing.

"Modern consumers are more interested than ever before in 'corporate integrity'. Profit is seen as 'ok' but not greed. When adidas embarked on a regional pricing strategy it opened itself up to charges of consumer exploitation on a scale not seen before in New Zealand (and) did not count on the fact that online retailers operating out of 'regions' such as the USA would exploit so ruthlessly the lower wholesale price adidas charged for the famed All Black jersey, thereby undercutting New Zealand retailers who pay a significantly higher price."

As for why adidas chose not level the playing field for its retailers worldwide by agreeing one wholesale price, Beath added "adidas knew New Zealander's historically were 'used to' paying higher prices for licensed products and were also relying on the innate loyalty of All Black fans to turn a blind eye to this pricing anomaly.

"Unfortunately for adidas the globalisation of retailing via the internet coupled with the power of social media such as Facebook has caught it out.

"The uproar created when adidas did not back down in the face of intense media scrutiny has undoubtedly harmed its reputation both among consumers and retailers in New Zealand.

"In short global corporations like adidas will need to rethink its strategy with the face of retailing now opening up greater price transparency online.

"The downside will also be a rethink of the value of sponsorship deals and how much support a global brand such as the All Blacks is really worth when price exploitation is no longer possible."

In response to the pricing revelations, Rebel Sport has reduced the price of All Black replica jersey's sold in its stores, its statement continuing "we have decided to make a stand for the benefit of the New Zealand sporting public."

The statement went on to explain that Rebel Sport will reduce the price of the All Black replica players jersey from NZ$189.99 to NZ$149.50 and the Rugby World Cup replica All Black jersey to NZ $170.

It concluded "for those customers who have purchased an All Black jersey from Rebel Sport before this price reduction, we will issue a Rebel Sport gift voucher for the price difference as compensation upon presentation of a receipt. We want no one be disadvantaged.

"(We are) confident that this price reduction, which is entirely funded by Rebel Sport, will enable thousands of kiwis to enjoy, what we all know, will be a wonderful rugby tournament."

Imagine our dismay when we discovered that All Black rugby jerseys were available for a lower price online than in retail stores in this country. We happen to believe that this jersey belongs to the New Zealand rugby public. The NZRU are custodians on behalf of all of us and Adidas for the time being are the sponsors of this jersey. They don't own it. We all do. We cannot have a situation where New Zealanders would pay more for All Black jerseys than almost any other country in the world. Quite frankly, this is an intolerable circumstance and we will not accept it. 

For more information go to www.facebook.com/pages/Adidas-All-Black-Jerseys-Are-a-Rip-Off/133825510041384