Prices fall though retailers warn deep cuts won't arrive until 2008

Some Canadian retailers are responding to consumer complaints and are bringing Canadian and U.S. sticker prices in line, though other business owners caution they won't be able to adjust prices until the new year.

'The cuts are being doled out with an eyedropper and I think maybe it should start being with a ladle.' —Douglas Porter, economist

Large manufacturers announced this week they are lowering prices and introducing discounts to remain competitive. The loonie hit $1.0718 US in trading Friday morning. But recent price comparisons have shown identical items are often priced more than 20 per cent higher in Canada than in the U.S.

Douglas Porter, deputy chief economist at BMO Capital Markets, says Canadian retailers appear to be taking a conservative approach with pricing, noting many consumers are taking their business across the border.

"The cuts are being doled out with an eyedropper and I think maybe it should start being with a ladle," Porter said.

"They've been very modest to date. I think retailers are at risk of losing a lot of customers to cross-border shopping," he said.

Wal-Mart said Thursday it will charge consumers U.S. prices for magazines, cards, books and gift wrap, while Indigo said it is offering irewards members a 20 per cent discount off the book of their choice. Rexalldrugstoressaid Friday they'llcharge U.S. list prices for magazines, books and Hallmark cards.Sears and the Bay have also said they'll be slashing prices.

Meanwhile, Chrysler Canada said Friday it is rolling out a new line of pricing incentives for consumers. On Thursday, the car company announced 1,100 jobs were being cut at its Brampton, Ont., plant.

Smaller retailers say prices will drop in 2008

But other smaller retailers, including Mary Andrews of Details & Designs gift shop in St. John's, say they won't be able to bring down prices until the new year.

"All of your Christmas giftware and Christmas decorations, all these sorts of things, are bought in January. Right after 2006, we're buying for 2007," Andrews said.

"You have absolutely no control over the prices after you've made your purchase. You've signed a contract and you're basically committed to paying those prices."

Ria Bleumer of Vancouver's Duthie Books said while she is lowering her prices as much as possible, there's still a five to 10 per cent gap owing to high shipping costs and agent fees.

"A lot of times when U.S. titles are transported and sold in Canada through Canadian distributors, there are also agents who demand their fair share," she said.

Meanwhile Allison Fryer, who owns the Cookbook Store in Toronto, said she hopes consumers will continue to support independent retailers and recognize they offer a unique set of services.

"We had a gentleman in recently and it really almost brought tears to my eyes," she said.

"After 20 minutes of explaining the different kinds of recipes in each book, and why and what it's for and also the different prices … he said, 'That's great, but I'm going to buy them off Amazon.' "

Fryer noted, however, that the customer returned and bought the book he had been considering.

"[He said,] 'You know what I just realized, you spent 20 minutes with me explaining all this and I don't get that when I [go] somewhere else."

Still, many consumers say retailers should respond to consumer complaints, noting that prices were not accurately reflecting the exchange rate even before the loonie reached and surpassed parity with the U.S. greenback.

Toronto-based consumer Katie Rajhans said if Canadian retailers don't lower their prices, she'll be doing her holiday shopping in the U.S.

"If [they don't change their prices] we will probably end up going to Buffalo to buy our Christmas toys," she said. "With the dollar so high and the prices so low down there, it makes sense."