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ShareIt’s early on a Saturday morning. The minivan is filled with several families. With the mist still rising from the body of water separating the two countries, a vehicle makes its way to the US side. Once safely across, the vehicle pulls into a parking lot and the passengers scramble out and scatter in different directions. One family goes to Wal-Mart, another heads to Best Buy and the other enters the mall. These people came over the border, the northern border. Their mission is to shop.
This is a scene that takes place daily, because the Canadian dollar will buy more here than at home. So our neighbors to the north are organizing buying excursions to US cities. The “looney,” a loving name for the Canadian dollar has gained in value over the years and is about at parity with our dollar. However, Canada imports many items sold at retail, pays import duties and must redistribute products to stores nationwide. The result is higher prices.
Clothing in Canadian retailers often is more than twice the price for the same garment in the states. Electronics may run 50 % more and appliances about a third higher. No wonder an increasing number of Canadians are planning shopping safaris to our side of the border. This is not a new phenomenon, similar activities took place just two years ago when the dollars of both countries were extremely close and retail prices in Canada were 18 % higher than comparable items in the United States. So this could be a boon to retailers located south of the border.
One retailer that could use some help in the US is Wal-Mart. Sales are off from a year ago. There are several reasons for this, with one being that as consumer confidence improves; some customers who were lured to the giant retailer by lower prices are returning to the stores where they shopped before the recession hit.
Another problem is Wal-Mart’s core customers are working-class families, many have lost their jobs or live hand-to-mouth on tenuous paychecks. The chain’s archrival, Target, appeals to a broader group of customers as do stores such as Macy’s and J.C. Penny. All of them are benefiting from an increase in consumer spending.
To counter a loss in traffic, Wal-Mart has rolled back prices and formerly discontinued products, those with lower sales velocity, have returned to the shelves to give shoppers more choices and spur impulse sales. If these tactics don’t increase the lagging customer count, more price reductions can be expected.
Lower prices might not help Wal-Mart’s bottom line, but it could increase store traffic, since price reductions translates to good news for consumers and more customers could ultimately boost sales. This is particularly true for those outlets located in markets where Canadians have easy access to their stores.
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