High prices drive Malaysian shoppers abroad, online

A model presents a creation by Gucci at the Milan Fashion Week February 23, 2011.

KUALA LUMPUR, Feb 25 — Malaysian shopping doyen Mira Abu Bakar, known for her popular blog on shopping, Redmummy (redmummy.com) is a self-professed shopaholic who spends thousands on branded handbags each year.

Most of that money, however, is spent in London and Paris rather than in KL handbag boutiques.

Despite government efforts to promote Malaysia as a shopping destination, massive price disparities are driving savvy shoppers like Redmummy overseas and to shopping websites in order to stretch their ringgit and get branded items for far less than what is available in Malaysia.

Redmummy, who makes a shopping trip to Europe every year, said Chanel bags that cost RM10,000 in Paris or London cost RM13,000-RM14,000 in Malaysia.

On a recent trip to London, she said she saved RM5,000 on the purchase of three handbags including a Miu Miu bag that cost RM3,000 (RM5,000 in KL) along with a Mulberry and Chloe bag.

“KL is very expensive,” she told The Malaysian Insider.

“The government really needs to relook at our prices, especially compared with Singapore. Only rich people can afford to shop in KL.”

Shoppers queue in front of the Louis Vuitton outlet on Orchard Road, Singapore July 9, 2009.

While going overseas to shop may seem like a hassle, many Malaysians find that the savings can pay for the flight ticket and possibly even cover other expenses of a holiday.

Finance executive and shopping enthusiast Rizal Omar said he “doesn’t even bother” shopping locally anymore but waits until one of his overseas business trips or planned vacations to do his purchasing.

Rizal last year took an empty suitcase to London where he stocked up on 20kg worth of purchases including Thomas Pink shirts for £29 (RM141) and Timberland shoes for £20 (RM98).

Thomas Pink shirts cost up to RM800-RM900 in Malaysia.

“The savings subsidised my holiday,” said Rizal. “Besides, you can’t get good quality shirts for RM100 plus ringgit in Malaysia.”

On his visit to the famed Bicester outlet mall in UK, he was told by retailers there that they see many Malaysians shopping there — including even members of the Malaysian royalty.

He also bought a Gucci bag for a friend for €380 (RM1,571) on a trip to Europe two years ago. The same bag apparently cost RM3,500 in KL.

Rizal also complained about “sales” in Malaysia, saying he usually only sees price reductions of about 20-30 per cent whereas on his trips to Europe, Singapore or Hong Kong, price reductions of 50-70 per cent are common and he sometimes even sees 90 per cent discounts.

Those who are unable to travel abroad normally place orders with those they know who are going or even with strangers.

Engineer Edward Seah, who made a trip to California last month, brought back 10 Coach handbags and wristlets for friends, family members and colleagues who ordered them before he left.

He also bought towels from the Calvin Klein and Ralph Lauren home range for just US$8 (RM24) each and shopped at Armani for clothes at 70 per cent off.

“I have never shopped so much in my life before,” he said, adding that he liked the no questions asked return policy in the US.

In the popular Low Yat online forum, there are Malaysians going overseas who advertise their shopping services whereby they will charge a 12.5 per cent commission for each purchase.

One such advertisement placed in July last year for a shopping trip to UK drew orders for about 100 items from 23 different forum members including for Ted Baker bags, Nike shoes and La Senza lingerie.

Those unable to travel abroad turned to online shopping.

Online shopping is also gaining popularity due to their wide range of products and incentives such as free shipping.

Student Hana Abu Bakar says that she finds it cheaper to shop online for brands like Banana Republic, and an increasing number of online shopping websites are offering free shipping for purchases above a certain amount.

She added that her friends bought BCBG dresses online for about RM600 while similar dresses cost up to RM2,000 in KL shops.

A check with the Thomas Pink website showed shirts for sale as low as £49.

Malaysia has made moves to make shopping more attractive in the country including abolishing import taxes in Budget 2011. The stronger ringgit should also, in theory, make goods more affordable.

Many shoppers, however, have complained that they have not noticed any reduction in prices.

The director of wholesale and retail at government think tank Performance Management and Delivery Unit (Pemandu), Ravidran Devagunam, acknowledged that some retailers will maximise profits on luxury items not readily available in Malaysia but said that the government is “unable” to compel them to discount their prices after the abolishment of import duties as luxury goods and apparel are not controlled items.

“However, we believe that market forces and consumer education will eventually force a price reduction of these goods over time,” he told The Malaysian Insider.

He added that some international brands control the price of their products from their principle countries, thus setting arbitrary retail prices for other markets like Malaysia to follow.

“This creates a false ‘advantage’ for their home countries in that European prices of certain brands are artificially cheaper than the prices in the Far East,” said Devagunam.

Foreign brands create price disparities to gain home ground advantage, said Ravidran.

He noted that, for many years, Malaysia suffered a limited choice of some branded goods because the market was regarded as immature and retailers did not bring in the full range of stock, leading to an outflow of shoppers which in turn resulted in lower economies of scale and less desire to “market appropriately.”

The Pemandu director also pointed out that with the opening of the 80-brand Johor Premium Outlet facility in Johor in November this year, Malaysians would get to experience the same level levels of outlet shopping as their counterparts in US and Europe. But in reality, we can hope it in our dream.

Joyce Yap, CEO of the upscale Pavilion mall in KL and the former president of the association for shopping and high rise complexes, said that it was unfair to compare Malaysia to other countries due to prevailing circumstances.

She pointed out that Malaysia has sales taxes of 10 per cent and the fact that the volume of goods sold and cost of logistics also contribute to prices being lower in neighbouring Singapore while Hong Kong and Dubai have no sales tax. But even we deduct out the 10% sales tax, its still 20-30% more expensive?? So please stop giving BS excuse!!

Yap disagreed that sales discounts were better overseas but admitted that due to sheer volume in places like Hong Kong, the probability of finding suitable styles and sizes was higher. Mostly due to that she's CEO of Pavilion and she need customers.

The lack of a service culture in retail outlets in Malaysia is also affecting the industry.

Hana said that she liked shopping in Australia where “the customer is always right” and online where a “no questions asked” return policy is common.

Yap concurred that service in the country needs to be improved.

“Malaysia has great potential to be a top-of-mind shopping destination in 3-5 years,” she said but noted that the range of merchandise, service levels and marketing have to be improved.

Alexis De Laporte, managing director for South East Asia at luxury watch brand Jaeger-LeCoultre, said however that the price of watches, which are duty free in Malaysia, are competitive with those in Singapore and Europe. Only if we (average salary citizen like us) can afford it.

“We have absorbed some key price increase in the production such as gold price which has been rocketing in the last few months,” added De Laporte.

Source:
http://www.themalaysianinsider.com/malaysia/article/high-prices-drive-malaysian-shoppers-abroad-online