Cars, clothing, books and computers. They’re all cheaper south of the border. Canadians have always accepted that fact because our dollar was worth so much less than the American greenback. But now it’s worth the same or more. Why haven’t prices come down?
It’s all over the news right now. People are fed up with having to pay a premium compared to their American cousins for the exact same merchandise. The web makes the frustration greater because it’s so easy to price shop and see for ourselves just how big the gap is between the two markets.
Cars are the biggest expense we have after home ownership and thus the difference in car pricing gets a lot of attention and rightfully so. However as someone who primarily watches the technology landscape, I’m especially sensitive to consumer electronics pricing and in a lot of cases, Canadians are getting the short end of the stick.
Here are some examples of price differences at online retailers for identical models, as of the writing of this post:
Apple 24-inch, 2.8 GHz iMac desktop
Panasonic 50" Plasma HDTV (TH-50PX75)
ButterflyPhoto (via Amazon.com): $1,449
Sony Blu-Ray Disc Player (BDPS300)
B&H Photo Video: $417
Sony Network Sharing Camera (NSCGC1)
How can these differences be explained? When I interviewed Pat Foran, CTV News’s Consumer expert, a few weeks ago on this issue, he said that retailers were citing a number of issues, but primarily:
it is a matter of the stock that is currently on the shelf or in the warehouse. Many of these items were purchased six months to a year ago and so the impact of the rising dollar has not been factored into the current selling price. “We can’t sell goods at a loss" businesses will say.
I understand this argument to a certain extent. If I was forced to sell my products for less than I paid for them, I think I’d close up shop pretty quickly. However, this is a short-term issue which should ease as soon as stock leaves the shelves. Moreover, it holds no water whatsoever when it comes to retailers that sell direct to consumer like Apple and Sony. After all, who are they buying from but themselves?
Foran mentions that there are other factors at play that make it more expensive for retailers to do business in Canada including:
Higher taxes and payroll costs
Greater shipping costs
Slower stock turnaround (more products staying longer in warehouses)
Smaller overall market (Canada is about one tenth the size of the U.S.)
A big reason people are hesitant to shop in the U.S. is the question of warranties. Many Canadian arms of international companies will not honour warranties here on items bought in America. This might well dissuade you whether the item is a car or a camera. However Foran explains that this obstacle might be largely psychological:
If you can save 10,000 dollars on a car purchase or 800 dollars on an SLR camera you may not be concerned about the warranty. Also, in the event you do have a problem you may be able to send it back to the U.S. depending on the contract. Consumers must keep in mind that often warranties are never used anyway.
Where do you stand on the dollar disparity issue? Do you shop at U.S. web retailers if they’ll ship to Canada? Do you cross the border to do your shopping? Does the desire to support local business keep your dollars at home despite the higher prices? How long are you willing to wait before prices match those of the U.S.?