I’m not sure where you stand on the subject of corporate greed, but this is a story about one of my favourite companies who have decided that they are willing to endure a public relations disaster for the sake of a few bucks.
Next month New Zealand is hosting the Rugby World Cup.
The media and various politicians are reminding us daily what a Good Thing this is. We are all supposed to feel good that all (?) eyes will be on little New Zealand and we will all get richer because (1) a lot of people, in the midst of the worst
economic downturn since the Great Depression, will spend a lot of money to come here and inject their hard earned dollars into our economy and (2) tourism, our biggest industry, will get a shot in the arm and even more tourist dollars will come rolling in.
All that may be true but it ignores the other side of the coin which is things like the debt service costs on white elephant stadiums and party venues that have been built with taxpayer money and the fact that the health service has basically said not to have a heart attack during the world cup because hospital emergency rooms are going to be overflowing with trauma injuries from alcohol fuelled fights and accidents.
But that’s not the basic issue before us today. It relates to the behaviour of the
International Rugby Board and various organisations supplying world cup related merchandise. As far as those guys are concerned, the World Cup is a giant pipeline designed to siphon money into their coffers from the pockets of people who can probably ill afford it.
And that mentality is epitomised by Adidas.
They have come up with a commemorative All Blacks rugby jersey that has been marketed as the “Must Have Item of the 2011 World Cup.” Need I say more? Adidas decided that they would sell 100,000 “units” in New Zealand this year and identified the lucky retailers who would carry them. The “suggested (by Adidas) retail price” of the jerseys is NZ $220, which is about US $180.
That’s a lot for a sweatshirt, but the experts at Adidas figured people would cough up that kind of money.
Then two things happened. First, someone figured out that they could
get a Chinese knock off online from eBay for about NZ $40. But who wants a knock off when you can get the real thing? The second thing that
happened was that people discovered that the real thing was available from
overseas Adidas distributors online at half the price including shipping and handling.
Who says globalisation isn’t good for the little guy?
Adidas, for one.
They don’t think it is a good idea for Kiwis to buy All Black stuff from overseas. You know how when you buy something online they ask you what country you are in and you have to find your country on a scrolling list? Well,
Adidas told people selling the jerseys on web sites to take New Zealand off the
list. So we can’t buy the jerseys on line.
That was considered unsporting by just about everyone in NZ, even people who wouldn’t be caught dead in an Adidas All Black jersey.
So what did Adidas do? Did they say sorry, it was a mistake? No. Did they say, we’ll lower the store price? No. In fact they said that we were being unpatriotic and not willing to support local rugby because the “price reflected Adidas’s investment in the game in New Zealand.” Which I’m pretty sure they’ve gotten a tax deduction for, by the way.
The New Zealand Herald had an online poll today asking whether people would boycott Adidas based on their “rugby jersey stance.” Ninety percent said yes. I’m guessing that the 10 percent who said “no” probably work for Adidas.
To put this in perspective, it is useful to remember that Adidas expected to sell 100,000 jerseys in NZ for $220. If everyone bought them at $110, the total
loss would be $10 million. Not all of that, in fact probably very little, comes out of Adidas’s pocket. The retailers who have already bought the jerseys and have limited right of return are the ones who will take the hit. And those are New Zealand businesses, unlike Adidas. In fact, a number of retailers have lowered the prices significantly to give consumers a break.
Last fiscal year, Adidas earned $21 billion after tax in New Zealand dollars. Ten
million bucks is less than .05% of that. I’ve got to believe that someone at Adidas corporate headquarters thinks that’s worth losing the goodwill of an entire country.