SHOULD PRICES REFLECT THE DOLLAR’S RISE?

Try this experiment. Go to your friendly bank and pick up $100 U.S. Then go into your nearest Chapters. Pick up a book by Oprah Winfrey called O’s Guide to Life. The price is on the cover: $29.95 U.S., or $37.95 Canadian. Hand over $30 U.S. The cashier won’t take your American money. The vague excuse is that inventory was ordered and paid for before the dollar hit parity. A cashier at another store punts the problem off to the manufacturer. If the manufacturer sent a rebate, then yes, we’d lower the price.

And this policy is not just in book stores. It’s all across the board. Which is why Finance Minister Flaherty is out there trying to convince Canadian retailers to lower their prices to reflect the rise in the dollar. (It hit $1.04 relative to the American dollar Friday.) Flaherty says we should shop around for the best prices.

Shouldn’t the Canadian consumer get any benefit from this situation?

What’s your experience with the favourable Canadian exchange rate?

5 Comments »

  1. 1
    Barbara Says:

    I buy most books via Amazon.com in the US. Even before the exchange rate swung in our favour, it was cheaper — and that included shipping! Amazon.ca did not have the selection of books. I may start ordering some clothes via the Internet as well.

  2. 2
    Chimera Says:

    I had the experience not with books, but with a musical instrument — a pennywhistle.

    I went to my usual music store to buy it, and the people there know me. I asked for the specific whistle, and the price on the package was US $10.95. There was no Canadian price on the package. The brand was Oak, a made-in-the-USA whistle.

    Now, the previous week, I had bought a whistle at that same store, and the price for me had then been $10.95. It had been marked down to that price from the original $15.95. And there had been no US or Canadian designation on the price. It was simply a store sticker on the whistle, and the whistle was not in a package. And the brand was Generation, a made-in-Britain whistle.

    The details are rather important, because there was a difference in brand, and in packaging. But the two whistles, aside from being in different keys, were identical — same construction materials, same color fipple. Take the manufacturer’s name off, and you couldn’t tell the difference.

    Anyway, when I went to pay for the second whistle, the price he quoted me was $16.95 plus tax. A whole six dollars more than the price printed on the package.

    I said no.

    He looked surprised. “That’s the Canadian price,” he said.

    “And the Canadian dollar is worth more than the American dollar, so I should be getting a discount on the package price,” I told him.

    “But we paid a higher price for it when we got it,” he argued.

    “Look,” I said, “I can go down to the States and get it for the ten-ninety-five that’s printed on the package. Why should I pay fifty percent more for it here?”

    “But think of the extra it would cost you to go there…gas, time spent in border lineups, and you’d have to pay import duties and GST on it.”

    “It would take me precisely one hour and fifty minutes to get down to the border by bus and walk across, costing me exactly nothing because I have a bus pass. I’ll take a chance on the duties and GST, because there’s a principle involved here, and I’m tired of being the victim of someone else’s fiscal stupidity.

    “And besides…I paid only ten ninety-five last week for a whistle I bought here. Why should I pay more now?”

    “That was a different brand. And it was on sale.”

    “Okay,” I said. “I’ll go to the bank and I’ll be back with American dollars.”

    “Uh…we don’t take American dollars. But even if we did, it would still be the same price.”

    “The package says different. And you’ve taken American dollars before.”

    “That was different. American was worth more, then. We don’t take them now. Store policy.”

    “And I don’t pay fifty percent more for anything than I have to. Consumer policy.”

    And I put the whistle back on the counter, put my money back in my pocket, and walked out of the store.

    Later that same day, I bought exactly the same whistle at a different store less than a mile away…for $9.99!

  3. 3

    Chimera:
    Thanks for sharting your detailed account of the whistle transaction. You certainly make your point.

  4. 4
    Tony Kondaks Says:

    Here’s something to make Canadians doubly frustrated: James Surowiecki, in his “The Financial Page” column in the Oct. 8, 2007 edition of The New Yorker, comes to the opposite conclusion for Americans. With the fall of the U.S. dollar, you would expect foreign-made goods in the U.S. to cost more. But, according to Surowiecki, “foreign companies have essentially chosen to protect U.S. consumers from the effects of the weak dollar…by accepting lower profit margins in order to maintain their market share.”
    He concludes that “American consumers are living in a kind of cocoon, where the rules that apply everywhere else seem not to matter” and “Americans are able to buy far more stuff with their flimsy currency than one would expect.”

  5. 5

    Tony:

    Rather ironic when you think there is so much lip service in the U.S. to letting market forces have their way. Thanks for the comment.


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