For Some Firms, Strong Dollar Brings Benefits
By Stephanie Stoughton
Buyers for the Chesapeake-based retailer regularly scour the globe for dolls, hairbrushes, wrapping paper and anything else they can sell for $1. But during the last year, they've been able to buy more with their own dollars in countries such as Thailand, Brazil and Indonesia--where currencies have plunged in value.
Those currency fluctuations mean the Dollar Tree has been able to purchase bigger glass bowls and vases in Indonesia and still sell them for $1 each. In Thailand, the retailer has been able to buy fatter candles. And now that Brazil's problems are worsening, it might be able to buy more of the glazed porcelain figurines and clay pots made in the Amazon forest.
"We can't change the price," said Erica Robb, Dollar Tree's shareholder services director. "But we want to pass on the value."
Before the Asian financial crisis, the buyers' trips to Thailand used to yield fewer purchases because the prices were too high for the variety store chain. But now that the country's currency has fallen, Dollar Tree is snapping up more of its goods.
Dollar Tree is not the only retailer benefiting from crises overseas. Home products retailer Crate & Barrel and catalogue company Lillian Vernon are among the merchants that have been buying goods at much lower prices in troubled countries such as Thailand and Indonesia.
"On our trips to Asia, we've encountered overcapacity in virtually every manufacturing plant we do business with," Lilian Vernon spokesman David Hochberg said. "They're desperate for the business."
But customers won't see the extra savings in the wooden desk organizer from Thailand and tableware from Indonesia--both in Lillian Vernon's catalogues. The retailer has opted not to lower prices and instead to use the money to improve its bottom line, thus pleasing its stockholders. Of course retailers also can find themselves on the other side of a currency swing: seeing their costs rise, but swallowing them rather than raising prices in their stores.
And even when there are savings, consumers don't always notice them. Dollar Tree officials say the improvements in the merchandise--the fatter candles and bigger bowls--are small, but they're still there if you look hard enough. And customers, they acknowledge, may not notice that what they bought for $1 is worth $1.05.
"You have to remember, we're talking pennies here," Robb said. "So you kind of have to keep it in perspective."
© Copyright 1999 The Washington Post Company