24 October 2008

Retailers, Manufacturers: Falling loonie, more sleight of hand

Opportunity! Can't wait 'til holidays are over!

So the CEOs and Boards of Canada's retail and manufacturing industries - and their counterparts who sell their goods to we foolish Canadians - are likely thinking.

Remember those days when Canadians were complaining that prices weren't falling as they should - back when the loonie was (and had been for at least three years) soaring?

Prices inched everso slightly downward but never did reach the point that would have seen the wealth shared with Canadian consumers. That scam meant that not only have we been propping up the otherwise slumping retail sector here at home, but also the one down south.

Now the loonie is falling - down as of today by more than 20% of its high just a few weeks ago.

So, hey! We ought to be grateful that retailers will magnanimously hold off hiking prices, to reflect the rise in the loonie, until after the winter holidays. Right?

"The costs that [the retailers] incurred for their holiday merchandise were incurred months ago so those are loaded and locked and won't change for the holiday season," said Peter Woolford, a spokesman for the Retail Council of Canada....

When the dollar achieved parity with the U.S. greenback in September 2007, many consumers called on retailers to lower their prices to reflect the true value of the dollar. Large manufacturers introduced discounts in a bid to keep shoppers from heading across the border, while smaller companies assured consumers they would introduce discounts once they had moved through the stock they had purchased before the loonie's surge.

Nowhere that I could find, online or out in the real world, did prices fall anywhere near the point they should have, especially the prices of books and electronics.

In fact, there's even a name for this phenomenon. It's called sticky pricing. So when prices do go up, don't be fooled into thinking that's only fair.

It won't be. The benefits of the loonie at par never were shared with Canadian shoppers. Instead, they bloated already gorging corporate profits, thus doing their bit to advance that "economic boom" we all heard about but never experienced in our own lives.

Which all means that, once again, when prices hike up as they inevitably will, Canada's consumers will get the shaft and shoulder the largest burden for maintaining the retail and manufacturing industries on both sides of the border.

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