Canadians are a strange lot. Privately, we’ll bitch and moan about our insipid governments, our lousy weather and our seeming inability to shake off second- or third-rate status on the world stage. Rarely will we speak out. Or act out. But one (peculiar) source of national pride these days — the soaring Canadian dollar, compared to the American buck — doesn’t seem to translate at Canadian retail cash registers. There’s a change happening, and consumers are — at long last — speaking out with angry voices and acting out with prudent purchases.
The Toronto Star featured a front-page story over the weekend detailing the direct response of Canadian consumers to this perceived disparity:
Retailers have been under fire in recent weeks for refusing to trim prices despite the soaring loonie. Consumers are complaining that even though the Canadian dollar has overtaken the U.S. greenback, prices across the country are still far higher for comparable products.
Indeed, this is something I’ve bitched about before, not just that Canadian consumers are denied the variety and quantity of products available to our neighbours to the south, but that the dimished selection is ridiculously overpriced, especially in light of the strong Canadian dollar.
For his part, [Canadian Finance Minister Jim] Flaherty is claiming victory in putting the retail industry’s feet to the fire.
“This is good news for consumers in Canada that some of the retailers have started to be responsive to the need to reduce their prices, given the increased purchasing power of the Canadian dollar.
“I’ve been encouraging them to do that,” the finance minister told reporters at meetings of the G7 finance ministers and central bank governors.
As the article indicates, yes, some retailers are adjusting their prices. But, as you shall see below, the efforts seem too-little-too-late or, to be blunt, completely fucking nonexistent. Here’s a howler, though:
But Retail Council [of Canada] president Diane Brisebois said everyone is pointing fingers at the wrong people.
Product manufacturers and importers are to blame for the price disparity, she said.
“We’re upset and we’ve had enough. We’re not gouging people and we’re going to tell him (Flaherty) exactly that at our meeting,” she said.
Not gouging people? Hey, Diane, I’m not calling you a liar, but can you explain what this is, if not gouging?
Let’s take a typical example, chosen randomly, using a typical and high-profile retailer with operations in both Canada and the U.S. Let’s say you were looking for a sturdy chest of drawers and, naturally, since you’re on a budget, you think IKEA. Check out the Canadian price for the chest of drawers below:
Ikea Canada’s Hemnes Chest of Drawers: $349.00
Now let’s check out the same chest of drawers if you happen to live an hour drive south of the 49th parallel:
IKEA USA’s Hemnes Chest of Drawers: $249.00
Now, since Ms. Brisebois was helpful enough to mention importers and manufacturers, let’s take a closer look at that pricing. It’s from IKEA, so chances are both items were made in Sweden and since Canada is closer to Sweden than the U.S., let’s be charitable and guess that shipping costs would be roughly the same. Up here in Canada, we pay a 6% Goods & Services Tax, which covers things like tariffs and duties and whatnot, so let’s add that into the price which consumers must pay for the Canadian Hemnes: $369.94.
The Canadian dollar, according to the Star article linked above, closed at $1.0355 US last Friday. So that puts the USA Hemnes price at $240.46 CAN. So what sort of non-gouging markup, Diane, are Canadian consumers seeing here?
53.85%
You’re upset and you’ve had enough, Diane? Give us a fucking break. And start explaining how 53.85% is not gouging. Please be as detailed as is necessary for us to understand the complexities of manufacturing, importing and retail pricing. And IKEA Canada? You’ve got some serious explaining — and price-adjusting — to do before I’ll set foot in your stores again.
14 comments
In Canada, the cost of higher taxes and bilingual labeling are also part of the price. What Americans save on an item they then pay out in health insurance.
here’s what ikea’s response to my email accusing them of gouging canadian consumers, its a nice lil cookie cutter explaination:
— Received from IKEA2.CACE/JNFD – 07-10-21 17.27 —————————————————————————————————————————-
Hello ________, Thank you for contacting IKEA. IKEA Canada prides itself on providing the lowest prices possible to its customer sand we guarantee our prices in our catalogue for one full year, regardless of the strengthening or weakening of the Canadian dollar. Our prices with our global suppliers are committed to anywhere from 12 to 18 months ahead of time at a fixed exchange rate that IKEA has locked into for one full year. As a result, IKEA Canada does not benefit in any way from the advantages of a strong Canadian dollar. U.S. and Canadian IKEA units also operate completely independently of one another. Each country determines its own prices based on factors such as the cost of goods, labour costs, foreign exchange, and transportation costs. Please do not hesitate to call should you have any further questions or comments. Store phone numbers are available online at:http://www.ikea.com/ms/en_CA/ikny_splash.html Best Regards,IKEA Website Customer Service
Thanks for posting that unsurprising response.
Oh, gee, as you read this I’m being Repu-Traced. Does this signal some sort of fresh cachet for This.That.No Other.? Nahhhh. But it’s nice to be on corporate radar.
Hey, IKEA, if you don’t want people writing about your outrageous, cross-border price differentials, you should probably do some IP blocking to prevent Canadians from seeing not just how your American operation offers a much wider selection than your Canadian stores, but also how your loyal Yank customers aren’t getting nailed with a whopping 53.85% surcharge for the same product.
And, by the way, I get it. I get that Canadian retailers have a smaller consumer base so their wholesale buying power is less than that of American retailers. I get that benefits and payroll are more expensive in Canada. I get that import duties are higher in Canada. I get that bilingual packaging (or repackaging) adds to Canadian costs (though I have yet to be briefed on why it is that my DVD purchases should be bilingually-packaged yet every other form of entertainment hard copy — magazines, books, CDs — can have their graphic designs unspoiled by needless and ugly linguistic duplication).
Show me how that adds up to 53.85%. Please?
Well, I can say that we (in the publishing industry) are under a lot of fire for this too, especially with the price of US books being so much less expensive than their Canadian counterparts. The whole industry, country, retail goods sector, etc., will have to adjust and it’s not easy for anyone.
But it’s amazing to think that the value of goods in general can be so very different, from cars to dressers, do Americans just consume so much more than we do to drive the prices down so far?
And thank you Ikea for guaranteeing your HIGH prices for a year, that’s so very HELPFUL.
But yeah, the only thing that sucks about it would be my US royalty cheque that comes from my publisher. I’m so used to getting MORE money because of the exchange, how crap is it going to be to lose money? Or am I just finding things to complain about?
…and, for the record, that whole argument that American retailers can sell for much, much lower because they have a customer base of 300 million versus a piddly 30 million in Canada? Is starting to smell funny. By that logic, a Canadian retailer with 300 stores should be able to sell product to customers at a vastly-reduced price compared to that offered by a Canadian retailer with just 30 stores. And it just ain’t so.
OK, so le’ts be real. No one, but no one lowers prices because they want to be altruistic, or because the Finance Minister asked them to. They do it because they must. So, hold off buying, get together and cross the border for bulk grocery buying, defer auto purchases, book purchases, furniture purchases. Buy from IKEA USA. Move the business to where it is cheaper. I get good deals from online shopping, with very little in shipping costs, by crossing the border (65km away) and picking up the goods there. I will be going to pick up three consignments next week. All I pay is the 15% I would pay in Ontario anyway. And that is coming down if the current minority government holds out long enough.
But, being good Canadians, we will do what we always do, bitch, complain, feel hard done by and pay anyway. As a retailer I would be very happy to have such a compliant bunch of customers. And I would only bring prices down if there was a real fall off in my business.
Articulate and spot-on.
I would add, though, that since Canadians are now becoming… less compliant — or, at least, more aware — we must, must!, let retailers know we’re taking our business elsewhere. Write them, email them, phone them, talk to managers, respond in the only sensible way to a revolting situation: by revolting.
[...] to the ongoing struggles of Retail Council of Canada President Diane Brisebois to convince Canadian Fi… — not the perpetrators — of the current chasm between American and Canadian pricing for [...]
[...] might recall a previous post — and, apparently, a Google fave — in which I compared U.S. and Canadian prices for an identical IKEA product: the Hemnes chest of drawers. I calculated that Canadian consumers were paying 53.85% more at IKEA Canada than they would at [...]
[...] favourite retail spokeshuman, Diane Brisebois, is still blaming suppliers for the disparity: “It was acceptable when the dollar was at 68 [...]
[...] six weeks ago, we looked at IKEA Canada’s price-gouging on a few items, and their bullshit attempts at spin control when Canadian consumers started paying [...]
THIS is rich… good blog. hope more people read it. had to share the fact that I got the EXACT same reply to an e-mail that I sent, but the part that really made me crap my drawers laughing was “Thank you for your email. On behalf of IKEA, we appreciate the time you took to share with us your thoughts about our store service.”
they appreciated it so much they copy and pasted a reply for me… isn’t that sweet.
How’s about copy and pasting the American web page. now with a matched dollar why not just ditch one of the sites for a year. probably save a few bucks not having to keep them synced (except of course the prices – which makes it even more work). There ya go. I just saved you a few thousand bucks IKEA, gimme that $100 off the Norden occasional table I want
. Gad, $279 Canadian and $179 American. nope, sorry. not for something I have to build myself. That’s uber-crappy!
im canadian all the way , i’ve been in florida for the last 5 years and years and I reallt cant believe my eyes when i go shopping .its amazing . its the little things as well as the big things eg. 1 gallon milk 2.39 in us 4.99 as high as 5.99 at london drugs wow.I decided to spring for kfc ,on the menu I saw a 20 peice meal for 41.89 before tax I almost threw up. I pay 8.99 for a ten piece bucket in the us mind you that was just for the chicken. where can i get a fake status card btw . wow what a deal these paeple are getting . its pathetic to see my retired parents pay twice as much as a 20 year old 1st nations person buying the same thing . they worked all thier lives in canada , what a sham . we need a michael moore up here or some kind of watchdog . as for the health care system we cant toot our horns as much as we think . I lived in a small community of about 30,000 people and there were four large hospitals . great care , the best . canadians pay for it through higher taxes like 4 bucks a gallon of gas . not to mention the waiting lists and long wait times at hospitals here . canadians just seem to accept it, I want to go to the highway with a sign and ask them if they like getting rear ended every single day every where they go . get a beer at the game,popcorn at the movies,air for your tires,roam with your phone,I could go on forever but its a really sad affair.im not sure what people make for a living here now but unless you make over 100k a year kfc will be a treat mabey twice a year . not so proud to be canadian anymore . still love hockey . I guess thats what canada has become a hockey nation and some totem poles. what a shame
So here I am, a fan of Ikea, wanting to put together an Effektiv combo. Only one thing. The hardware is well over 100 dollars cheaper in Michigan. My frustration ultimately lead me to this site. Sad to say that it’s now 2011, and Ikea are still up to their dirty tricks.
One poster mentioned –
“And, by the way, I get it. I get that Canadian retailers have a smaller consumer base so their wholesale buying power is less than that of American retailers. I get that benefits and payroll are more expensive in Canada. I get that import duties are higher in Canada. I get that bilingual packaging (or repackaging) adds to Canadian costs…”
I’d like to state that Ikea NEVER opens a new store in the US or Canada unless they will generate X amount of sales and foot traffic in X city. That’s why Toronto has 3-4 big Ikeas and Buffalo has a whopping 0. So the smaller consumer base argument for Canada is really a joke. It’s not like they’re setting up stores in the Northwest Territories and then griping about low sales.
The idea that bilingual packaging adds to costs is ridiculous. Regardless of country, you’re going to need to print details specific to that region.
Ikea realizes that psychologically, Canadians are accustomed to paying more then our US counterparts. How long they will continue to hold that against us, I don’t know. But one thing is for sure, I won’t be buying any big ticket items from Ikea Canada in the foreseeable future.