Czechs should not rely solely on local retailers if they are price-conscious when buying furniture or cars. According to Právo, these items can be significantly cheaper in neighboring countries, as well as cosmetics. Sometimes the differences can be in the tens of thousands.
Some companies have decided that Czechs, under the pressure of news about inflation on the crown, do not care and are willing to pay higher prices than Poles, Slovaks, or Germans. On a Skoda Octavia purchased in Poland, you can save tens of thousands of crowns, and IKEA furniture is often cheaper there by thousands. And drugstore products are more affordable in Germany, where purchasing power is significantly higher.
“Firms can afford it because people buy goods for these prices,” said Petr Sklenář, chief economist of J&T Banka.
Právo compared some prices of the same products at Skoda Auto, IKEA, and dm drugstores in the Czech Republic and neighboring countries. For example, a Skoda Fabia in Ambition equipment with a 1.0 MPI engine costs CZK 369,900 in the Czech Republic but is CZK 15,000 cheaper in Slovakia.
An Octavia Ambition with a 1.5 TSI engine can be purchased in the Czech Republic from CZK 679,900, while the same car costs CZK 50,000 less in Poland. The combi version, which starts at CZK 719,900 in the Czech Republic, is almost CZK 70,000 cheaper in Poland.
However, in the first half of the year, there was an even more significant difference between prices because, at that time, the Polish zloty was sold for five crowns compared to the current 5.43 CZK. Buying a car from a northern neighbor made it possible to save up to a hundred thousand crowns. However, you will pay a hundred thousand less for a new Octavia Combi even now if you buy it in Bulgaria.
Despite this, cars sell well in the Czech Republic. “On the demand side, consumers are willing to pay those prices. Although there is a lot of shopping tourism in border areas, both to Poland and Germany,” said Jan Fanta, an expert from EY Czech Republic.
According to Fanta, it generally holds that compared to Germany, Austria, and Poland, the Czech Republic has a smaller market and, therefore, on average, less competition and higher relative fixed costs to serve the market for one product.
“In the case of some products, especially imports, the exchange rate of the crown and related costs of securing it can also play a role,” he said.
And so, for example, Ariel All-in-One washing tablets are 40 percent cheaper in Slovakia than in the Czech Republic at dm drugstores. One hundred grams of Hipp Bio Combiotik baby food costs CZK 65.80 in the Czech Republic but only CZK 43.60 in Poland.
“Operating small retail chains is more costly regarding logistics, rent, and operating costs. The final price also reflects different fees and taxes in individual countries. Smaller countries also buy products at different purchase prices from suppliers,” said Jiří Peroutka, a dm communication manager.
However, the explanation for higher prices in a smaller market lags when we look at Slovakia, which has half the population of the Czech Republic. All compared types of goods are cheaper in Slovakia, ranging from single-digit percentages to 40 percent above. Slovakia is part of the eurozone but does not have higher taxes.
“Firms are confident in the strength of domestic demand. If households did not have money, they could not afford it,” said J&T Banka economist Sklenář.