General Realities

>	The Canadian market is one-tenth the size of the U.S. market which presents scale issues for retailers here, in competing with prices in the U.S.
>	The cost of doing business in Canada is higher, given our higher labour costs, transportation/logistics costs and various unique labelling requirements (nutritional, bilingual and metric, for example).
>	We are very grateful for the many benefits that come with being Canadian, but they do come at a premium.

Operational Realities

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Retailers often purchase merchandise up to twelve months before it appears on store shelves. This means that many of the products on the shelves this Holiday Season were purchased when the Canadian dollar was valued at about $0.85 American. This presents a challenge for retailers in delivering prices for Canadians that fairly reflect the value at which they purchased the product.

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Retailers in Canada pay significantly more by way of import taxes to bring goods to market. For example, to import a pair of steel-toe boots, a retailer in Canada pays a 17.5% duty versus 8.5% for a retailer in the U.S; to import an MP3 player, a retailer in Canada pays a 5% duty versus 0% for a retailer in the U.S. There are hundreds upon hundreds of similar examples, which put retailers in Canada at a significant disadvantage to their American competitors. RCC wants to work with the federal government to help level the playing field here for retailers — small, mid and large. (Other duty comparisons are attached.)

The Power Of Multi-National Brands/Suppliers

>	Increasingly, retailers in Canada are sourcing products through multi-national brand owners/suppliers who sell through a Canadian distributor.
>	Historically, based on a weaker Canadian currency, these multi-nationals have been charging retailers in Canada anywhere from 20 – 60% more for identical products that are being sold to their U.S. competitors — and in some cases, their U.S. parent company. These prices are set outside of Canada for the Canadian market.
>	There has been significant concern expressed by retailers of all sizes in Canada that multi-nationals have not been adjusting their prices to take into account the stronger Canadian dollar.
>	Another concern is that given the underlying economic concerns in the U.S. market, many multi-national brand owners/suppliers are likely trying to recoup American-based market losses in stronger economies like Canada.
>	Retailers in Canada continue to work hard to negotiate these prices down, but given the market's small size relative to the global picture, the ability to influence change is challenging at best.

The Struggle For Small, Independent Retailers

>	The majority of independent retailers buy their goods in Canada — in Canadian dollars. In their businesses, they have not seen any benefits because of the strong currency. For them, $1 today is the same as $1 last year.
>	While some larger retailers have the size to be able to renegotiate with suppliers and in many cases take interim losses on products by reducing prices, independent retailers do not enjoy the same luxury.

Shopping In Canada — Many Benefits
Shopping in Canada brings about with it many reassurances for Canadian consumers:

>	A competitively priced marketplace with many options;
>	Supporting local entrepreneurs, jobs and the tax base that provides us with the many benefits that come with being Canadian.
>	Guarantees around product safety, warranties and product returns/exchanges;
>	Comfort that, if needed, you can get the right parts for your product and have your product serviced — right here in Canada;
>	No wait-times or additional import taxes at the border.

>	Canadian retailers will always do their best to keep their prices competitive.
>	At a base level, retail prices in Canada are generally higher due to higher labour costs, transportation costs and bilingual and metric labeling requirements.
>	It is not uncommon for Canadian retailers to order their products 6, 9 or 12 months in advance — at fixed exchange rates. So, depending on the product, it can take some time for savings related to currency fluctuations to flow through the system.
>	Many Canadian retailers are importing products that have significantly higher duties placed on them than those going into retail stores in the United States — this creates further price disparities that Canadian retailers have no control over. For example, a Canadian retailer importing a cashmere sweater from Europe will pay a 23% duty versus an American retailer who is required to pay a 5% duty.
>	Many small, mid and large retailers in Canada are reporting that suppliers/manufacturers are not currently providing them with fair prices reflecting the strong Canadian dollar. This is creating significant challenges for retailers who want to ensure that consumers are getting the very best deal possible.
>	Canada's economy right now is relatively strong. The same cannot be said for that in the United States. We are two very different markets. Over the past number of months we have seen many retailers in the U.S. slash their prices in an effort to hang on to market share.
>	Retailers have been delivering lower prices to Canadian consumers. Due to creative sourcing decisions by retailers, Canadians have seen price deflation in the apparel and electronics categories.

Retailers in Canada continue to help keep our economy strong — providing jobs and reinvesting in our local communities across the country.

Although the strong Canadian dollar is posing some challenges, retailers across the country — small, mid and large — remain committed to delivering the best value possible to Canadian shoppers.