Source: BMO
A survey conducted by the Bank of Montreal reveals that 18% of Canadians have plans to shop south of the border this holiday season. The percentage is up from 13% last year despite the slightly weaker Canadian dollar, currently hovering around US$0.95.
So What?
It certainly does seem tempting to shop south of the border, especially as Canadians are now paying an average of 11% more for the same goods than Americans are, according to Mark Carney, governor of the Bank of Canada. Is it really such a big problem for Canadian retailers though?
It's not that big of deal. Not unless you're mainly based in BC, Ontario or the Atlantic provinces, which BMO says are where customers are the most likely to cross-border shop. And even then, the chances are slimmer if you're not sitting too close to the border. Ultimately, the effect is actually quite minimal with cross-border shopping accounting for only 2% of retail sales, according to Carney.
Nevertheless, that's still potential revenue lost. Although Canadian retailers can't necessarily compete with American prices, the competition for holiday revenues is also a race against time. With Black Friday and Cyber Monday deals reminding consumers that they've only got one month left to shop for gifts, retailers on both sides of the border should also focus on reaching shoppers well before their wallets run dry.
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