The recent drop in the Aussie dollar means that many local retailers will soon be turning over lower margins. Although there is little that can be done about tough economic times, I have seen some very ingenious ways that retailers can try to protect themselves and save some margin.
Generally in good economic conditions, retailers can enter into contracts where a purchase price for merchandise is determined at the time of writing the contract, even if the transaction does not occur until a specific time in the future. This may be expressed as an amount in Australian or the local currency of the manufacturer.
However, in tough conditions like this, a contract that determines price based on the current Australian dollar can result in losses for a retailer if not drafted carefully. Retailer’s who are entering into new supply agreements should ensure there is a biannual or annual price review clause in the contract, so that they have the flexibility to have costs lowered when times improve.
Don’t make the mistake of using the same template supply contract as you did last year – the economy can be unpredictable, but your contract should be future-proof.
As a retail lawyer, I’ve helped many happy clients draft and review their supplier contracts. If you need advice or assistance regarding your contracts, contact me for a no-obligation chat at or on 1300 033 934.