March 11, 2019 — 5 min read
In the very competitive retail environment, it is critical that Jaycar products are priced exceptionally well for their customers. Minimising the effects of movement in exchange rates is incredibly important to ensure great product prices especially in times of wild rate fluctuations caused by events outside Jaycar’s control.
Jaycar Electronics is a name that has been synonymous with electronics for close to 40 years. The company is a leading Australian and New Zealand electronics retail company that is committed to providing their customers with quality, selection, and value for money. With over 6,500 items off-the-shelf, a 24-hour service delivery on orders and over $10 million of inventory, stock management and pricing thereof, is a vital part of the Jaycar success story.
Jaycar has a recurring requirement to purchase large quantities of foreign currency, therefore mitigating currency risk is key. The risks to consider include internal issues such as currencies pegged to emerging markets, government instability, pressure on property values, drought and mixed economic messages, as well as external factors such as such as the price of oil and the US political situation.
In this environment, there’s no way a company can reasonably predict foreign exchange markets on their own. Hence, it is crucial for Jaycar that they partner with a foreign exchange supplier that gives them the ability to risk mitigate and sleep easy knowing there will be no major impact on the financial statements, should there be a big rate change.
When Adrian Zamattia joined Jaycar, along with the traditional banking service, XE was the incumbent foreign exchange supplier. Not content to just accept the status quo, Adrian evaluated XE services with a view to ensuring the right partner was in place to address Jaycar's significant foreign exchange requirements. As a company with very large importation costs, the small margins made on retail product sales could easily be lost by poor foreign exchange decisions.
At the end of the review period, XE were retained as virtually the sole provider of services. Since that time, Adrian has had no reason to doubt that decision.
“Dealing with XE is a win-win situation for us. XE do not just try to sell us their services, they are a true business partner who understand our business so as to help us deliver outstanding FX outcomes. Their service levels are exceptional.”
Jaycar makes large, regular and similarly valued foreign exchange purchases every month. Jaycar predominantly takes advantage of XE’s structured two for one products – with intermittent use of spot contracts.
XE has found that while foreign exchange may only affect 10% of a company’s business, it often makes up 90% of their concern. By layering in products and providing alternatives to traditional hedging methods, the team at XE have been able to provide Jaycar with an effective risk management strategy. This, combined with the market awareness, knowledge and skill of XE’s staff, has allowed Jaycar to focus on their business instead of being weighed down by currency concerns.
Banks are important financial partners but Jaycar has found that they often offer diminished rates and add a level of administration overhead that is too cumbersome especially with all the paperwork required – usually when time frames are critical. This is not the case with XE.
As Adrian says:
*“XE gives me the ability to sleep easy at night. The guidance and market intelligence I receive from Steve (Cheval), John (Chisholm) and Michael (Johnston) of XE is outstanding. *
Steve has visited Jaycar many times to gain a better understanding of our concerns, to give recommendations, and provide guidance – all of which has been exemplary.
Combining great advice with exceptional product offerings like structured options allows Jaycar to achieve it’s most important goal of minimising exchange rates surprises. No one wants those!
*At the same time, we get the very best rates available, which allows Jaycar to offer our customers great prices. It’s always a win–win with those guys.”*
Regardless of your business size, XE will work with you to tailor a FX solution to best suit your ever-changing business needs.
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