Cheap Shopping at Rich Neighbours

By: Denis Bocquet

While the average salary in the Czech Republic is less than half of that in Western Europe, prices tend to be here comparably high. In Berlin, for instance, you work 14 hours to afford an iPod. In Prague it is 43 hours.

One would expect that this applies only to high tech or products where you pay for the brand name. Surprisingly, this is not the case. Czech people justifiably complain about low quality, small choice and high prices in local supermarkets. These ironically often belong to foreign trusts that sell exactly the same items cheaper in countries with higher income.

In the recent years, it has become a new Czech “survival strategy” (or act of defiance) to commute for food, cloths and consumer electronics to Germany and Austria. The magazine Peníze reports at least 20% savings or several thousand Czech crowns per shopping tour, which explains why even people from Prague (a town that is literally rich – meaning the town, not its people) travel for shopping to Dresden.

Shopping malls in Dresden have already adapted to the new trend and offer signboards in Czech language and employ Czech-speaking staff. During Czech public holidays, every second visitor to the malls came from the Czech Republic. While sales considerably benefit from Czech customers, the number of overnight stays however remained unaffected because: “Všude dobře, doma nejlíp”There’s no place like home“. Or: Why to pay for accommodation when you are only two hours away from home.

Another driving force behind this cross-border phenomenon is the Czech Ministry of Finance. VAT in the Czech Republic is currently 20% and for some products reduced to 14% (at typical shopping-destinations: Germany 19% and 7%, Austria 20% and 10%). Both numbers will increase in 2013 to 21% and 15% – the law has just been signed by the president – much to the frustration of Czech consumers.

Transportation here is still comparably cheap and we can therefore expect that even more Czechs will travel abroad for shopping. The only ones who cannot escape the increased expenses will be, as usual, pensioners, socially disadvantaged, or people who otherwise are tied to their town.

By: James G. Milles