Yahoo Finance Bargains that are worth crossing the border
Budget-conscious Canadians have demonstrated they’ll drive significant distances, wait in long border lineups and wrangle with assorted duties, taxes and shipping charges in pursuit of a bargain. The Retail Council of Canada figures Canadians buy $8 billion of goods in the U.S. each year online and in-store.
U.S. Thanksgiving weekend Black Friday sales, where cheaper U.S. prices meet deep discounts, can be especially hassle-worthy. But with the loonie currently worth less than 75 American cents, combined with the fact that Canadian retailers are increasingly taking the Black Friday sale season more seriously, cross-border shopping has lost much of its allure.
“There’s definitely a difference in Canadians’ willingness to go cross-border shopping this year,” says Kristen Larrea, communications manager at RetailMeNot, an international company that helps retailers with consumer engagement and sales. “Cross-border shopping is not offering what it used to.”
In a recent survey, RetailMeNot found that 51 per cent of Canadians say they don’t know where to find the best Black Friday deals and only 28 per cent of Canadians will actually be shopping on Black Friday. But for those who can’t break the habit, where should they be targeting their efforts?
It’s challenging to produce hard and fast rules about what’s worth crossing the border for. What consumers end up paying depends on the daily exchange rate, the retailer, the brand, the local taxes, the location or whether the product flopped and is on clearance. Some shoppers can dig up fantastic finds in the most unlikely places. But hear us out. Whether you’re after the cheapest LED TV that money can buy or a specific designer handbag at any discount at all, there are key guiding principles to help determine whether hauling out the passport and gassing up the car will save money this holiday season.
Electronics and appliances
The bigger the ticket, the higher the margin, which giving retailers more wiggle room to offer deeper discounts. Larrea points to the example of a 60-inch LED TV for sale at Best Buy US for about C$1,200, compared to the same TV at Best Buy Canada for C$2,000—a hefty saving of $800. Maureen Atkinson, senior partner at J.C. Williams, a global retail advisor, says American retailers can discount more partly due to the economies of scale, since the US market is roughly 10 times the size of the Canadian market. “The American company has to sell to Americans and will be as competitive as they have to be to make those sales in their own marketplace,” she says.
Still, Amazon’s aggressive online expansion and Apple’s tight pricing controls have had strong effects on the electronics sector, reducing the number of retailers but also making prices more transparent across borders. A Samsung Galaxy Note Pro was recently selling for C$200 more at Best Buy USA than at Best Buy Canada, while an HP Envy laptop computer was C$175 more in the US store. Meanwhile, an iPad Mini 2 at US Walmart was almost C$65 cheaper than at Walmart Canada. Serious shoppers need to research prices and follow the sales closely—or stay home.
Top-end designer clothing and accessories are usually more affordable in Canada than in the U.S. after the exchange rate takes its bite. For instance, a Tag Heuer diamond watch goes for C$4,250 at Macy’s in the US, compared to C$3,500 at Hudson’s Bay
Apparel and footwear
The declining loonie has mostly eroded cross-border bargains in this category, especially at the mid-price range. The Deutsche Bank 2015 index of what-costs-what-where found that Levi 501s are cheaper here, at 79 per cent of the U.S. cost in Toronto. Still, there are some US savings to be had, even if they fall short of what they used to be. The Deutsche Bank index found the Canadian price of a pair of Adidas Super Star 2 running shoes to be 109 per cent the US cost. (For shoppers who will go anywhere for the best price, the index found that the Super Star 2 runners were cheapest in Brazil, where they’re 62 per cent of the US cost. Avoid France and Germany where the consumers pay 163 per cent of the U.S. price.)
Some of the price variations stem from who’s doing the selling. Globally minded fashion retailers like H&M and Zara price their merchandise with remarkable consistency from country to country and so are hardly worth visiting abroad. Top Shop products in Canada have been notably cheaper than in the US because of the deal the company struck with Hudson’s Bay. Yet US-focused retailers can offer merchandise that’s unavailable in Canada at impressive prices. “Some cross-border shopping will remain a good deal just because of the lack of some brands north of the border,” says Monika Hajzokova, Canadian sales director at Shopbot, an international network of price comparison websites.
Canadian tariffs on apparel and footwear imported from outside North American are often higher than US tariffs on the same products, so the origin of the product can be a major factor. The website Crossbordershopping.ca has a simple tool for calculating import duties. Beyond exemption limits, the final price on US products, including duties, often isn’t different than the Canadian price. “Because of tariffs, Canadian retailers still don’t have full control over their pricing,” says Michael LeBlanc, senior vice president of marketing and digital retail at the Retail Council of Canada. “But because of the very competitive environment here, they’ve been keeping prices really, really sharp.”
Winter and sporting goods
Winter coats and accessories are usually cheaper in Canada, where the market is relatively large and consumers are particularly demanding. Comparable Under Armour women’s fleece hoodies go for CAD$140 at Macy’s in the U.S. but C$115 at Hudson’s Bay. “Canada also has a pretty good distribution of sports brands here,” says Hajzokova.
Luxury goods
Seldom discounted and priced for international big spenders, top-end designer clothing and accessories are usually more affordable in Canada than down south these days after the exchange rate takes its bite. A Tag Heuer ladies ceramic diamond watch goes for C$4,250 at Macy’s in the US, compared to C$3,500 at Hudson’s Bay, while a Fendi Buggies backpack, about C$3,780 from Fendi USA, is C$60 cheaper at Holt Renfrew. Canadians have traditionally seen U.S. outlet stores as a way to access luxury without breaking the bank, but more and more outlet malls have opened here in the last few years. Craig Patterson, editor-in-chief of Vancouver-based Retail Insider, which covers the retail trade in Canada, says that by 2017, every major Canadian market will have an outlet mall.
Vehicles
With exchange, duty and taxes, the sticker price of a car or truck needs to be at least 30 per cent less in the US to make bringing it back to Canada worthwhile, says Patterson. That’s possible, though the Deutsche Bank index puts the Canadian cost of a new Volkswagen Golf 2.0 at 88 per cent in Toronto.
Home and garden
Tires and home furnishings can be cheaper in the U.S., though they can also be cumbersome to bring back across the border. Just like in the apparel category, price discrepancies also depend on whether the retailer is primarily focused on the U.S. market or on the world. After currency conversion, pretty much everything at Ikea Canada is cheaper than or the same price as American Ikea.
Baby seats and highly regulated products
Because Canadian safety regulations can vary from those in the US, some products sold here must be manufactured in smaller runs, according to different standards. For those who accept that the differences in manufacturing standards don’t mean much, a U.S.-market infant car seat can be a third or more cheaper in the U.S.
