Tuesday, October 23, 2007

Cross border inequities

A lot of people in Canada are now talking about the 'gouging' going on in the Canadian retail sector. We're calling it gouging due to the fact that our dollar is now worth more than the US dollar and yet we still pay on average 20% more for the same products as Americans. The most talked about examples of late have been printed material (with the blatantly obvious prices printed right on the cover), vehicles and electronics.

The retailers themselves have a bag full of reasons why prices are higher in Canada, from inventories of stock bought when the dollar was lower, to certain fees that they have to pay compared to US retailers.

I think I have a simpler explanation why - they charge what the market will bear. In Canada, we have far fewer choices of stores (both by brand and quantity), which limits our choices for competition. Plus, it seems we're willing to pay the prices, otherwise retailers would be suffering badly - which they are not. In the US, the economy is comparatively less robust and they have far more competition for the consumer dollar. So prices are naturally lower.

There is only one thing that will truly force prices down and that's more choices. Now that our dollar is worth as much as it is, we have the power to buy stuff from across the border. With the coming Holiday shopping season just around the corner, consumers will be looking to maximize their gift buying budgets and if that means buying from American retailers (made simpler now thanks to online shopping), then local retailers could be in for a little shock.

I would honestly like to know however, what all these supposed fees are that retailers claim drive our prices up. Could they be referring to customs and duties? Aren't we part of a free trade agreement? Have our governments purposely tied our collective hands and forced us to pay higher prices from local shops instead of searching out bargains south of the border? Stay tuned............

1 comment:

Bernie May said...

Please do tell, Karl. I want to know how to get that cheaper reloading gear across the border without paying duties.