Much has been made of the cross border shopping issue. With the Canadian dollar at parity or better with the American dollar, there are bargains to be had – but we argue – at what cost?
Weekend News reports lament plugged border crossings as anxious consumers roar into the United States to buy goods at cheap prices. Apart from the odd anecdotal story, we never figured prices to be that much cheaper as to be worth the effort.
It is somewhat a role reversal for people within the magic driving distance to the U.S. Years ago when a 65 cent Canadian dollar was the norm, Americans enjoyed shopping in our border towns, as well as visiting the Great White North. Despite differences in consumer costs, the huge gap in the value of the dollar kept them coming. Retailers and the tourism industry benefited from our poor currency. Exporters benefited immensely from a built-in price difference, choosing, in typical Canadian fashion, to enjoy their market position rather than ramping up with innovation to keep their industry competitive.
Today, with dollar parity, Canada faces numerous challenges.
For us there is some enjoyment in the prospect of savings for expensive machinery and novelty items from the U.S. But in a general sense, waiting in line at the border to maybe save a few bucks is not our idea of fun. As for shoppers who fail to declare their purchases or underestimate their value, they must have steely
nerves. The thought of getting pinched would have us in a cold sweat, to the extent of overestimating the cost of any goods purchased.
We share some sympathy for business people who were caught in the sudden up-swing of the looney. As an accountant friend cautioned, the media that have done much to whip consumers into a frenzy have failed to explain that most Canadian firms purchased their goods for far more than adjusted asking prices will be once the market settles. Some companies have softened the blow for dealers by re-jigging prices. There is no question some marketers will be stuck blowing out inventory at below cost to clear the shop for new goods. Before the phrase “that’s business” parts reader’s lips, consider that competitive pressures in many industries have ridden margins to the point that there is little wiggle room left.
Throw an additional curve like new programs that reduce the purchase price on new products and a retailer could very easily have stock that cost more to purchase than its new sale price. If a business can’t pay its bills, it won’t last.
There are more insidious elements to the “purchasing elsewhere phenomena.” Whether it is big box stores, outlet malls, or destination shopping like the U.S. or large urban centres, there are many benefits to supporting local business. For many, it is a case of personal choice or shopping habits, but we believe there is great merit in buying at home.
For starters, commercial enterprises pay substantially more taxes than residential homeowners. Without a healthy business community, homeowners would see taxes go through the roof. In addition to providing employment to others in the community, there are many intangible benefits to each of our home towns.
When it comes time to support local Sports teams or donate to a gift table, rest assured the majority of the participants are small business owners who probably have kids in the sport, too. Even larger stores – like Home Hardware, Canadian Tire, Shoppers Drugmart, Zellers and the various grocery chains, provide employment to many people and give back to the community in many ways. They pay big taxes too.
There is one caveat to our shop-at-home formula. No business deserves unequivocal loyalty or patronage, just because it has a sign out front. If the staff or owner are not friendly, do not provide top-notch service, and offer shoddy goods and service, there should be no guilt associated with avoiding that store. Shopping at home does not and should not be a free ride. There are some people who should not be in business, and they quickly learn that lesson because customers won’t support such operations.
Another idea that is returning to many businesses is the notion of supporting people that support them. While it is not a clinical definition of bartering, we have heard some very satisfying stories where people have a little network of places where they do business.
It’s a bit of a throwback to simpler times when the asking price of goods was less important than, “Will the shop keeper stand behind it?”
There’s no real winner in the current state of commerce. We can only hope the shift to destination shopping does not tilt the apple cart a little too far.
