Canada looks to lure US retailers

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Canadian consumers are feeling underserved by retailers and are interested in more retail offerings from the United States, according to a recent survey by the Canadian postal service, Canada Post.

According to Paulina Sazon, direct retail strategist for Canada Post's direct marketing division, the average Canadian consumer is excited about obtaining US goods, as well as having access to the competitive pricing that comes from retailers from the States, especially when it comes to e-commerce stores.

"In Canada, US retailers can expect a very engaged online shopper," Sazon enthused. "Online shoppers in Canada represent a group of buyers [who] spend 47 percent more than the average consumer."

Canada Post has begun working with many US retailers through its Border Free product.

This product lets retailers in the United States sell to Canadian consumers directly online in Canadian dollars and without having to deal with taxes and import fees.

The software calculates this into the price of the order and the consumers receive the goods as a normal shipment. A key change in the transaction is that they can do all this without having to pay COD taxes, which, as Sazon notes, is par for the course in Canada.

US retailers currently using the service include Guess, Puma, Crate and Barrel, and Canada's neighbor, L.L. Bean.

In the United States, there are approximately 13,000 catalogers and e-commerce stores, while in Canada, the total of online or catalog retailers barely tops the 150 mark.

According to Sazon, this results in the market being very underserved.

"If I wanted to buy a teddy bear online [in the United States], I can think of four retailers off of the top of my head, including the Vermont Teddy Bear Factory," Sazon points out. "In Canada, you'd be hard pressed to find anything."

The US dollar hitting parity with the Canadian dollar is not the only reason that US retailers are attractive to Canadian consumers.

"The pricing of goods coming from [US retailers] is much lower, even before the dollar reached parity," Sazon explained. "A Burberry watch would cost $141.45 (Canadian) cheaper in the US, and a Dolce & Gabana suit would cost $1,000 (Canadian) cheaper. There is not enough competition in the [Canadian retail] market, so [Canadian] retailers do not have to price to compete. US retailers have the opportunity to take advantage of the [expanding] interests of Canadian consumers."

The Department of the Treasury, the Department of Commerce and the National Retail Federation all declined to comment on the drop in the dollar and what this means to retailers, and to consumers in both countries.

But the drop in the dollar might cause American businesses to pause and rethink their cross-border strategy.

"US retailers are leaving a lot more on the table by not having a Canadian fixed pricing strategy," Sazon added. "They [remain] at the mercy of the dollar going up and down. Canadians will buy from the US retailer, regardless of the dollar, because of the offerings. So it makes sense to peg their pricing."

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