Canadian retailers cry foul over some tactics used to lure Canucks south

Ottawa resident Janet Baigent became a statistic when she and a group of girlfriends crossed the border into upstate New York last month on the weekend that the Canadian dollar hit parity with the American dollar. Although the numbers for September aren't in yet, experts are predicting double-digit increases in the number of Canadians crossing into the U.S. from the same time last year.

Stopping in Syracuse, N.Y. at the Carousel Center Mall and a Waterloo, N.Y. outlet mall, Ms. Baigent said many items were not as cheap as she thought they would be, but there were definitely bargains.

"For instance, a Nike running top here in Canada would go for $55 or $60. At the outlet malls they were going for $25," she said.

With many Canadian retailers yet to bring their prices in line with their American counterparts to reflect the higher value of the Canadian dollar, many shoppers are taking matters into their own hands and heading south for weekend shopping.

The personal exemption for Ms. Baigent's 36-hour trip is only $50, but the duty on her items was nominal at around $3 for $250 worth of goods. Ms. Biagent said next time she goes to the U.S., she will be staying 48 hours to take advantage of the $400 claim limit. "Certainly you can get lots of Christmas presents out of the way by doing that," she said.

'Numbers may change'

Diane Brisebois, president and CEO of The Retail Council of Canada, said although her organization is expecting the holiday season for 2007 to see growth between five and seven per cent over the previous year, stories like Ms. Biagent's has her members worried.

"With the high Canadian dollar and the increase in cross-border shopping, those numbers may change," Ms. Brisebois said.

She said many suppliers have different prices for their Canadian and U.S. retailers, which lead Canadian shoppers to believe they are being taken advantage of. Another major concern is that U.S. stores along the border have specials that lower their prices even further, skewing Canadians' perception of how cheap U.S. consumer goods really are.

"No question with economies of scale, the U.S. is going to offer better prices. But we have noticed that U.S. retailers have been dropping their prices at unheard of levels simply to try to lure Canadian consumers," she said.

"We know from speaking to our counterpart in the U.S., some of the prices that are showing up in the malls close to the border in the U.S., the prices are lower there than they would be for example in Chicago, in New York, in any large city. So if American shoppers were to shop in centres trying to attract Canadian shoppers, they would see lower prices than in their own cities."

U.S. businesses thrilled

One high-profile event being touted by the Fashion Outlets of Niagara and Duty Free Americas is a three-day Midnight Madness weekend so Canadians can "experience" a Black Friday, the somewhat foreboding name of the American Thanksgiving weekend, traditionally the start of the American holiday shopping season. There are extra discounts for those who come over on tour buses from Canada.

And Canadians are spending like they've just won the lottery. According to Ed Healy, spokesperson for the Buffalo Niagara Convention and Visitors Bureau, Buffalo retailers are comparing current sales numbers to "the week before Christmas," with "parking lots filled with Ontario licence plates," and it's only October.

"Boy, the stories we're hearing from retailers is that there has been a huge surge in Canadian shoppers. For many years we were all going up in your direction, so the tides have turned," Mr. Healy said. "Businesses here are thrilled."

But not everyone is benefiting.

"It has been very, very challenging for Canadian retailers. Consumers are speaking with their feet and their cars," said Ms. Brisebois.

Online retailers take aim

Canadians are also speaking with their computers. According to a January 2007 report by eMarketer, 12 million Canadians shopped online and nine million bought products or services over the Internet in 2006, totalling $9.4 billion in sales on product and services.

Karin von Abrams, eMarketer.com senior analyst specializing in Canadian markets, said she thinks there will be a, "perceptible shift for Canadian buyers looking to non-Canadian sites for the holidays."

Emmie Fukuchi, general manager of www.airmilesshops.ca, also noted the shift as the Canadian dollar began to climb. "Our U.S. retail partners have seen a steady climb in activity ever since the dollar hit the 80 cent US mark two years ago. With parity, they expect to see an increase in cross-border online shopping that outperforms initial projections for the year."

Ms. Brisebois said the Retail Council has noticed some U.S. sites are marketing to Canada, but these companies are not held to the same standards as companies who actually sell in Canada, such as bilingual packaging and metric measurements. Most shoppers, however, are more concerned with where the bargains are, rather than how U.S. retailers are competing with their Canadian counterparts.

"Retailers are so frustrated, and we have spoken to the government on behalf of them and said, 'look, because of American websites and retailers who don't have a presence in Canada, they're taking advantage of this but it's not a level playing field,'" she said.

Ms. von Abrams said she thinks the really noticeable advantage will be with the good, old-fashioned shopping trip this season.

"If they are within striking distance of the American border, it may be easier for them to just nip down there, especially if they are thinking of the holidays, then they can take advantage of the exchange rate."