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Why are prices in Morocco more expensive than in Europe?

Why are prices in Morocco more expensive than in Europe?

December 25, 2023 – 6:00 pm – Economy

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Prices of large retail chains such as Zara and Bershka in Morocco are often much higher than in Europe, which regularly leads to discussion.

It is not unusual for the prices of clothes in the Moroccan branches of these stores to be 50 to 70% higher than in some European countries. For example, a Zara coat that costs around 150 euros in Spain costs 2,000 dirhams in Morocco, and Bershka shoes that cost 70 euros in Europe sell for 900 dirhams in Morocco.

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Industry experts point to several reasons behind these price differences, with additional costs such as transportation, currency exchange, higher rental prices and, above all, unfavorable tax policies being the main factors. Import duties have increased significantly in recent years, which has a direct impact on the final price for consumers. However, the planned review of the 2024 Budget Law could alleviate these fiscal pressures.

“Since 2012, the import duty on franchisees has been 25%. But to encourage brands to source locally, the government decided to increase the duty first to 30% and then to 40% in 2020. Many franchisees chose to pass this tax on directly to the country,” the report said. “Tariffs on consumers have led to a decline in sales. The 2024 Budget Law will reduce these fees from 40% to 30%.”

Read also: Boss Zara exploits Moroccan workers

According to the government, this difference in prices aims to favor local producers, but this interpretation is conditional by sector specialists. Karim Tazi, founder of Marwa Clothing Stores, explains that brands target different segments of the market, from luxury to mass market. The price positioning of luxury brands, and thus the final selling price to consumers, is a reflection of this positioning.

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