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.
I totally agree that the USD prices on items should be adjusted to fit the current currency conversion to help canadian retailers. In alot of cases its not the retailers fault but they have to obey the pricing policy from its supplier. This ofcourse means that canadian retailers have to sell a product at a certain cost, but the american retailers get to sell their product at a lower cost then canadians.
ReplyDeleteI agreee there should be some price adjustment although Canada will never be able to match the prices in the US. We simply do not have near the population that the US does; part of the reason for their lower prices Also many of the stores we shop at are american owned anyway. I do make a conscious effor to shop at smaller stores when possible, especially if they are Canadian owned and operated. I think more stores should do more to advertise that fact. It would certainly set them apart from the American competitors in my mind. With that said,the dollar is now at par, inflation has been more than I can bare as of late... so it is off to the states I go this weekend. Gas, shopping, cigs and booze - all necessities really!!??
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