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Winnipeg Free Press - PRINT EDITION
Shopping frenzy
Some retailers are complaining an increase in cross-border shopping as a result of lower duties is hurting their bottom lines, but they can't blame Canadians for taking advantage of the high dollar and lower American prices.
The new exemptions have several measures to protect retailers, such as the requirement that travellers must stay more than 24 hours before they can return with $200 in goods duty-free. It means most Canadian tourists would have to stay in a hotel and eat several meals before they could return with duty-free goods. The savings for short trips, then, are probably not significant.
For stays longer than 48 hours, the limit has risen to $800, but again the costs of the trip reduce the overall savings. Nevertheless, there are enough savings to make it worthwhile for millions of Canadians every year, but the answer isn't to shut the border. Basic consumer goods, such as books, cost more than in the U.S., but prices are falling due to the pressure exerted by the Americans.
The frenzy of cross-border shopping is expected to continue, particularly if the Canadian dollar remains high. Canadians like travelling in America, and shopping is part of the road trip.
Canadian firms need to be more competitive, offer unique products and provide better service if they want to get back some of their lost share of consumer spending. Americans, by the way, are also enjoying increased exemptions in Canada, providing some relief for retailers.
Republished from the Winnipeg Free Press print edition August 23, 2012 A10
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