IS SHOPPING IN THE U.S. STILL WORTH IT WITH A WEAK LOONIE?
Many Canadians are at least marginally aware of a mild decrease in their purchasing power lately.
The loonie, most often compared to the value of the greenback belonging to our neighbours to the south, has sunk to its lowest value in six years, according to a recent report from CTV News.
The weaker Canadian dollar is shaking the psyche of Canuck consumers. According to a Bloomberg report, the loonie has dropped around 16 per cent compared to the U.S. dollar since the beginning of 2014.
And the loonie hasn’t hit the bottom of its fall yet, according to industry experts. The Financial Post projected back in February that the loonie could drop as low as 69 U.S. cents in the wake of the recent oil price collapse.
With the drop in the loonie’s value, is it still worth it for Canadian consumers to shop in the U.S.? In our opinion, the answering is a resounding yes. And we’ve got a few reasons why.
COMPETITIVE U.S. PRICING
While experts report that U.S. retailers with Canadian operations will be the real losers because of the sinking loonie, consumers still come out on top because of competitive American pricing.
According to reports from CBC, Canadians generally see a markup of 10-50 per cent on the same goods compared to their American counterparts. With the potential of paying half the price for consumer goods, the U.S. retail landscape is still extremely alluring for bargain-hunting Canadians.
And with the plethora of sales and deep discounts U.S. retailers offer seasonally and around holidays, Canadian consumers can still get quite the bang for their buck when shopping across the border either online or in brick-and-mortar stores.
MORE DISPOSABLE INCOME
While the loonie’s progressively sinking value has shaken some Canuck consumers, hypothetically buyers are coming out on top in this scenario.
Some economists are actually reporting that the drop in the loonie’s value represents a return to the loonie’s “true value” after it enjoyed hovering around parity compared to the greenback for the last few years.
Back in January, the Bank of Canada cut its main interest rate from 1 per cent to .75 per cent, meaning the privilege of borrowing money from your bank is a bit cheaper these days. Cheaper loan prices mean more room in consumers’ budgets for a little shopping down south, despite the weaker loonie.
This is coupled with the meteoric fall in oil prices over the last few months. While the country’s oil and gas industry is suffering from he drop in crude prices, Canadian consumers are enjoying cheaper gas prices. Again, less expensive gasoline actually translates into more purchasing power for consumers. More room in the budget means that Canadians have more disposable income to hunt for bargains in the U.S.