Retailers to lobby Ottawa over prices
Sector to meet with finance minister to discuss strong dollar and consumer backlash
Carly Weeks, Vancouver Sun
Published: October 23, 2007
OTTAWA -- Canadian retailers continue to struggle with the devastating impact of the high dollar and many are relenting to consumer pressure by slashing prices and offering discounts to keep shoppers from spending their money south of the border.
"In the past 30 days, we've reduced over a thousand products," Ron Wilson, vice-president of merchandising for Best Buy Canada said Tuesday. "We don't expect that would slow down. In fact, it would probably continue to accelerate for the remainder of the year."
But the situation has become increasingly dire for some merchants, particularly those who run independent businesses, who are being pitted against one another and pushed to lower prices while still facing pressure to pay employee wages, rent and bills.
"This is driving me crazy and it makes me re-look at why I'm doing this for a living," said Pat Caven, manager of Perfect Books, an independent bookstore in Ottawa. "Now, after surviving Chapters, Costco, Pharma Plus getting into the book business, now we're being pitted against one another and I just think that's incredibly unfair."
Canada's retail sector will face off today at a meeting on Parliament Hill with Finance Minister Jim Flaherty over the effect of the strong dollar and the backlash from consumers.
Some retailers want to take Flaherty on over the fact he has said consumers should pressure retailers to drop prices, without taking into account the fact merchants are being charged high rates by suppliers.
The dollar has been at or above par with the U.S. dollar for about a month, prompting thousands of Canadians to shop south of the border and demand lower prices in this country. The dollar closed at $1.0196 US on Monday.
Major Canadian stores, including Zellers, Wal-Mart Canada, Best Buy Canada and Canadian Tire say their prices have been coming down in the last few weeks, due at least in part to the rising dollar.
"Over the past month or so, Canadian Tire has been lowering its prices either through our regular priced items or through promotion items in our flyer," company spokeswoman Lisa Gibson said.
But many retailers -- particularly small and medium-sized businesses -- report suffering a downturn in business and say they're bleeding Canadian customers who are buying online from U.S. stores or driving south of the border to take advantage of the increased buying power of the strong dollar.
"[Retailers] have a lot of goods on the shelf that they may have purchased several months ago on the basis of a considerably lower dollar," said Perrin Beatty, president and chief executive officer of the Canadian Chamber of Commerce. "It was much more expensive for them to buy and suddenly they're confronted with a situation of having to compete with retailers across the border."
The book industry faces a particularly tough battle because most of its products have the U.S. and Canadian price listed on the cover. "It's reduced our revenues," said Joseph Stewart, manager of Blackberry Books Ltd., a Vancouver bookstore. "We're selling about the same amount of books than ever, but it's bringing in less money per book."
The store has begun putting reduced-price stickers on many of its books, in part because Random House of Canada is discounting its merchandise.