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.
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.
“We [manufacturers] are constantly trying to balance near term profitability with stable long term growth,” says Aaron Skelton, vice-president brands and business development, GreenSpace Brands. “The variable that challenge us all is the consumers willingness to absorb the exchange fluctuation at shelf. Our biggest advantage is to ensure that consumers understand the value and quality of our products. The greater the consumers understanding, the more loyalty we can generate to sustain purchases after these necessary increases.”
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.
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.
