The internet revolutionized the retail industry and retailers were reaping the rewards. Now, it is responsible for retailers in Canada to cut prices, reduce margins, and lose sales due to cross boarder shopping.
I came across this article on the Globe and Mail that talks about how Canadians are shopping more and more in the US because they have better deals and cheaper products.
In 1994, ecommerce started to gain momentum into the new way companies were marketing their business. The internet helped companies reach out to new markets and customers. Having an online presence is now a norm and any company without it is definitely at a disadvantage.
When companies first started to really adopt the internet as a way to communicate back in the mid 90’s, the Canadian dollar was at a different level then it is today. Back then, the Canadian dollar was trading at around 0.65 – 0.75 cents to $1 USD. Canadian retailers were also 12 to 15% high priced then US stores but because of the exchange rate, Canadians seldom went to the US to purchase items.
Since 2010, the Canadian $ traded almost at par with the US $ (approximately 0.97 cents) yet prices in Canada are still 12 to 15% higher.
Because almost all retailers today post prices to the items they sell on their website, the internet gives us the power to sit at home and compare prices between items sold in Canadian vs the US. Add in the fact that 75% of the Canadian population live close to the boarder; retailers here are certainly feeling the heat to cut prices.
I find it interesting how the internet, which is good thing, can now be something that hurts and may even kill some retailers out of business unless they make changes to reduce their prices. If not, cross boarder shopping will continue to increase and only those retailers who do cut prices will be able to survive.
