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Southbound dollars: Local businesses seeing high-flying loonie heading to the U.S.

A strong Canadian dollar is generally considered the sign of a robust economy. But as the loonie bulks up, so too do the lineups at border crossings, as bargain-seeking Canadians take their shopping dollars south.
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With the Canadian dollar at a 35-year high

A strong Canadian dollar is generally considered the sign of a robust economy. But as the loonie bulks up, so too do the lineups at border crossings, as bargain-seeking Canadians take their shopping dollars south.

The 1990s are long gone, when people would dash into the U.S. to fill up with cheap gas and buy a block of cheese, but some local businesses are feeling a renewed pinch of revenue heading south.

The issue is on the agenda for the Abbotsford Chamber of Commerce’s government affairs committee.

“Any leakage of business outside of your economic zone is a concern,” said David Hull, chamber manager. “Any time (the dollar) starts getting over 95 cents, it becomes an issue.”

With the Canadian loonie nudging close to $1.03 American, it is as strong as it has been in 35 years.

Hull said the committee will be looking at why so many products can be bought cheaper in the U.S. Even some American franchise stores offer the same products for prices cheaper than at the same franchise in Canada.

He said books are a good example – on the book jacket is the publisher’s price if it is sold in Canada, and a significantly lower price if bought in the U.S.  He wants to know why.

“There seems to be a supply issue,” said Hull. “I think a lot of the disparity comes from purchasing power. Do we have the purchasing clout to stand up for ourselves?”

Compounding the problem, he said customer loyalty is considered an outdated concept, and many Canadian consumers now think only of their own wallet.

“Price is everything,” he said, but added shoppers should be cognizant of the fact that when they support local businesses, they keep their hometown economy healthy.

That was a drum beaten by Abbotsford’s chamber and others during the shop local campaigns of the 1990s. Hull said those initiatives are unlikely to be revisited.

“They don’t work,” he said simply.

However, he said consumers should definitely be aware that businesses help build their communities.

“When your minor hockey team needs uniforms, or you’re looking for charity, where do they go? Very often, they go to the small, independent business person.”

Local business people certainly agree with that sentiment.

“No doubt, we need to take a look at the long-term cost of taking dollars out of the country,” said Gerri Charles, owner of the Champagne and Lace bridal store.

She has been in business in Abbotsford for 25 years, and remembers the heydays of Sumas, Washington.

“Everybody was running across the line for groceries and gas.”

By 2001 the Canadian “peso” was so weak against the U.S. dollar, it took almost $1.60 Canadian to buy one American dollar. Cross-border shopping was a non-issue.

Charles has 17 local people employed by her small business. She thinks of them as 17 mortgage payments that have to be paid every month, and it all comes from the business at her store.

“Americans are patriotic, and they shop at home,” she said, referring to ‘Buy American’ campaigns promoted by government. “We need to be more proud, and look after each other.”

Hull said Canadian businesses could get help from their border guards.

“It would appear Canadian Border Services (CBS) is not really diligent about collecting duties,” said Hull.

However, Chamber staff are judging only from anecdotal information. They have heard from people who have bought products that exceed their limit, and were only advised by border staff what they should have paid – but the taxes were not collected.

The government affairs committee will inquire about the mandate of CBS.

That’s an issue for Brent Murdoch of Abbotsford’s Valhalla Pure Outfitters. People will check his price on an item, shop around using their iPhone, tell him they can get the article cheaper in the U.S., and ask what he’ll do for them.

“It makes for some interesting times,” he said.

A recent example was a backpack which was $30 cheaper in Bellingham. Gas to Bellingham and back, combined with taxes paid at the border, would make it more worthwhile to buy the item locally. But the customer had no intention of declaring the purchase.

“We have to pay duty on it, we can’t get around that. We have to obey the law,” said Murdoch.

“Everyone wants good hospitals and schools, but they run away from paying taxes,” he said.

He doesn’t want people to think everything is cheaper in the U.S. – some items are more affordable at his store.

“It’s not like it’s an across-the-board thing,” he said.

When the Canadian dollar was lower, he had American outdoorsmen flocking to his store.

Nor does he want people to think local business people are gouging their customers with high prices. He regularly compares prices with other stores.

“We’re doing our best to stay competitive, and we regularly lobby our suppliers,” he said. “We have to stay competitive to stay in business.”

He used to do some cross-border shopping, and says he understands consumers’ motivations.

But after being in business, he keeps his money in the local economy.

“There’s a bigger picture here. We all have to be part of supporting our economy.”

Meanwhile, Sumas, Washington has enjoyed some benefits from Canadian cross-border shoppers.

Sumas Chamber of Commerce president Rod Fadden said the two shoe stores on the main street and the rest of the retail that catered to British Columbians closed their doors when the loonie tanked.

But there is a new growth business – the small city of 1,320 people has five shipping companies, and for them business is booming.

Canadians shop online and have goods shipped to Sumas, where they pick them up. Most avoid the border lineup by walking across with a dolly or even a little wagon, pick up their purchase from businesses like UPS or Ship Happens, and walk back to Canada. He has seen Canadians purchasing a lot of tires, but also things like ATVs and a wide variety of goods.

Grocery stores have received a boost, and a new gas station is opening.

“We’re seeing traffic at pre-911 counts,” said Fadden.



Neil Corbett

About the Author: Neil Corbett

I have been a journalist for more than 30 years, the past decade with the Maple Ridge-Pitt Meadows News.
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