While the weak rand has no influence on which Dell computing products Pinnacle brings into South Africa, it is putting pressure on the company as it aims to keep prices affordable.
Pinnacle’s Cape Town branch manager Michael Dockerill told MyBroadband that the exchange rate always affects IT product pricing, as stock is imported at a specific rate of exchange (ROE).
“The rand’s exchange rate has been so volatile over the past few months that we’ve seen increases of anything between 12% and 25%,” said Dockerill.
He said they still import the same product sets, but are bringing in smaller, more frequent quantities to ensure the exchange rate does not hurt them.
“We must make sure we don’t cost at R15.50 to the US dollar, for example, and then find that we are at R14.50 to the dollar the following week.”
The weak rand is costing Pinnacle money
Dockerill said the weak rand means they have to decrease their gross margin percentage where possible to keep prices low.
“For example, if our margin on a product was 5%, we shave it down to 3%. We’re taking a knock on our margins wherever possible,” said Dockerill.
However, it is not possible to cover high increases when the rand value drops drastically.
“The weak rand means customers will inevitably end up paying more, but not as much as they would if we weren’t dropping our margins wherever we can,” he said.