As the Canadian dollar continues to weaken and the prices of imported goods continue to soar, Canadian retailers are expected to make some tough decisions in the coming months.
In addition to staff layoffs and cutting wages, retailers will opt to hike prices in order to fight the consequences of the loonie’s 16-per cent drop compared to the U.S. dollar over the past year.
“The weakening Canadian dollar is very challenging to say the least,” says Haigo Derian, vice-president of L’Oro Jewellery. “However, I still believe the industry can take this opportunity to create a stronger Canadian offering. The big win here is to keep luxury goods purchased in Canada, as opposed to abroad, which is more discouraging to Canadian consumers today than ever before. That said, to capitalize on this new narrative both retailer and vendor must work together to find a common ground where each party absorbs some of this burden equally. In the end, I think this is a recalibration of industry and consumer mindset; and if treated progressively can provide positive gains to all Canadian!”
According to a survey of large and mid-sized retailers from a Retail Council of Canada study, the major effects of the Canadian dollar’s decline are yet to come.
Statistics Canada says that consumer prices have increased by 1.3 per cent in August from July as a result of higher costs for food, housing, home decor and clothing despite cheaper gas prices.
Retail prices in Canada have been rising at an annual rate of 6.3 per cent over the past six months, which is the fastest rate since 2004.
The Retail Council of Canada report does have one positive point – the drop in the dollar has resulted in less cross-border shopping and more spending on Canadian soil. CJ
