Strong Canadian Dollar – an Opportunity for U.S. Retailers?

The U.S. dollar held strong competitive advantage over its Canadian counterpart for more than 30 years – with that it became standard among Canadian consumers for U.S. imports to cost more.  Recently, the Canadian loonie has achieved parity with the U.S. greenback presumably making U.S. goods less expensive on the Canadian market – many are scratching their heads wondering why prices have not fallen.

While explanations vary from smaller market, higher distribution costs, different labeling requirements and higher taxes among those often cited – others point the finger at retailers who are plain old reluctant to lower prices

As more consumers become aware of the Canadian currency’s increased buying power, many are speculating it is only a matter of time before Canadians look online to find their desired U.S. goods – but at a better cost.  In a CTV.ca report, marketing analyst Lindsay Meredith said if Canadian retailers don’t reduce prices to reflect the new economic reality, “they’re just going to lose a lot of business to the American guys who are going to have a field day picking up the action.”

In the same report, CTV reported that a shopping cart full of U.S. goods purchased in Canada, cost significantly higher than when the identical items were purchased in the U.S. – an average of 20.4 percent more.  “Sample items included a pair of cargo shorts sold from the Gap, which were priced 15% higher in Canada, as well as a Blu-Ray copy of ‘The King’s Speech,’ which was 28 percent cheaper in the U.S.”

While analysts predict the price discrepancy will disappear in the coming months, others are offering what may turn out to be the best advice of all to Canadian consumers.  According to Consumers Association of Canada President Bruce Cran, “there are two things consumers can do to protect themselves.  One is to buy across in the U.S.A., and the second is haggle.”

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