Consumers want to support local producers – if the price is right
Selling a product that is actually manufactured domestically carries a great deal of weight if the quality is genuinely good, and even more so when the product is iconically Australian.
Consumers go for it not just out of national pride – it may have more to do with wanting to keep jobs in Australia, supporting Australian families and the local economy. People all over the world are inherently protectionist which, after all, is why we still have tariffs and import quotas.
However, there is a limit to the power of patriotism. People's buying behaviour tells us that even if a product is made in Australia and of good quality, it won’t sell if the product is too expensive.
A pre-eminent example of this is Dick Smith Foods, which markets 17 Australian-made food products, mainly through Coles, Woolworths and IGA stores. The company also once sold the products online and from its own store in Belrose, Sydney but had to close those operations down because they weren’t making any money.
The problem wasn’t that consumers didn't like the products. Rather, it was because they were able to easily compare prices with similar, cheaper items and most chose not to pay extra for Dick Smith’s supermarket products.
In the US, where labour costs are cheaper, the situation is now much more favourable for locally made products. For example, the world’s largest retailer, Walmart, is ramping up its ‘Made in America’ campaign, which pledges to stock an incremental US$50 billion in US-made merchandise over 10 years. Rising wages in places like China are making domestic sourcing economic sense again, but Walmart hasn’t missed a trick in using its marketing machine to turn economic rationality into patriotic virtue.
Australian-made does matter in the purchasing decision
In Australia, labour costs don’t look set to fall, but the recent sharp decline in the Australian dollar will most certainly help local producers become more competitive.
A survey carried out by Roy Morgan Research in July 2013 found that 80% of respondents said they ‘always’ or ‘sometimes’ buy Australian-made or Australian-grown products even if they were more expensive.
Aussie businesses are skeptical about domestic sourcing
When selling Australian-made products to businesses, price is an issue, according to research by Roy Morgan.
Only 20 per cent of Australian companies had a specific policy in place to buy Australian-made goods. The reason cited among companies that had no Australian-made policy was: price 21 per cent; lack of availability 20 per cent; and value 14 per cent.
