Finance Minister to meet with retailers about lowering prices

[Juventus3]

THIS is government in action.

"It's an opportunity for us to be persuasive on behalf of the Canadian people to encourage retailers to reflect in their prices that they have an advantage with respect to costs now," Flaherty said.

"If their costs go down because of the increased value of our currency that should be reflected in prices, and the sooner the better."

http://www.ctv.ca/servlet/ArticleNew...hub=TopStories

Who said the cons only care about big business?

[Devils'Advocate]

Shouldn't the market take care of itself?

[Hakan]

Originally Posted by Devils'Advocate

Shouldn't the market take care of itself?

Retailers really have no incentive to lower prices. It's not exactly a market failure. People are willing to pay X dollars for a book, or movie ticket or car. The value of the currency has little to do with the price.

[Devils'Advocate]

Originally Posted by Hakan

Retailers really have no incentive to lower prices. It's not exactly a market failure. People are willing to pay X dollars for a book, or movie ticket or car. The value of the currency has little to do with the price.

So supply and demand are determining price. Where is the problem?

[Flames in 07]

Originally Posted by Hakan

Retailers really have no incentive to lower prices. It's not exactly a market failure. People are willing to pay X dollars for a book, or movie ticket or car. The value of the currency has little to do with the price.

Only when the inputs and outputs are in the same currency, which they generally are not.

[SeeGeeWhy]

Originally Posted by Hakan

Retailers really have no incentive to lower prices. It's not exactly a market failure. People are willing to pay X dollars for a book, or movie ticket or car. The value of the currency has little to do with the price.

The article points to the decrease in power of foreign suppliers because of our stronger dollar.

Canada's Top 10 Import markets in 2006:

(Country, % Share, CAD Xchange rate)

United States, 54.9 , 1CAD = 1.035USD
China, 8.7 , 1CAD = 7.77CNY
Mexico, 4.0 , 1CAD = 11.21MXN
Japan, 3.9 , 1CAD = 118.64JPY
Germany, 2.8 , 1CAD = 0.72EUR
United Kingdom, 2.7 , 1 CAD = 0.51GBP
South Korea, 1.5 , 1 CAD = 946.11KRW
Norway, 1.4 , 1CAD = 5.54NOK
France, 1.3 , 1 CAD = 0.72EUR
Algeria, 1.2 , 1 CAD = 70.94DZD

Total of Top 10, 82.4

Seeing as how over half of our imports come from the US, and a majority of the rise of our dollar can be attributed to improved strength relative to the US, it is a somewhat fair argument to say that some businesses may be in a position to decrease their prices.

[Flames in 07]

Originally Posted by Devils'Advocate

So supply and demand are determining price. Where is the problem?

The problem we are seeing is that S/D are not perfectly efficient. It will take a alot of time before retail prices properly reflect current FX, also, don't know if it is true, but many retailers say that stuff used to be cheap given how low CAD used to be, so now large retailers want to catch up.

[photon]

Supply and demand doesn't really apply in a captive market does it? While the retailers aren't actively colluding, the movement of the dollar basically makes it that way and the retailers are able to take advantage of the situation just by inactivity.

The receiver I want is $850 in the US, $1300 in Canada.

[Incinerator]

Originally Posted by Devils'Advocate

So supply and demand are determining price. Where is the problem?

There is no problem, those who don't like the prices should just shop across the border. Whining to the government for everything is just typical Canadian modus operandi.

[jolinar of malkshor]

Originally Posted by Incinerator

There is no problem, those who don't like the prices should just shop across the border. Whining to the government for everything is just typical Canadian modus operandi.

Not everyone lives along the Border.

[Burninator]

Originally Posted by jolinar of malkshor

Not everyone lives along the Border.

Exactly. It's not the most realistic option to buy everything over the boarder. For example, some dealerships won't sell to Canadians, or the respective dealerships in Canada won't honour the warranties. Plus there is a limit on how much people can spend while in the US.

[peter12]

While I'm not really sure about the economics surrounding this, we really do live in a captive market with no outside options for consumers to pursue cheaper goods. Unless you want to spend $2000 on a plane ticket to China. Haven't there been accusations of producer monopolies artificially keeping prices high, such as the automotive industry?

[GreenTeaFrapp]

Originally Posted by Burninator

Plus there is a limit on how much people can spend while in the US.

There is a limit on how much you can spend and not pay duty. If there was a limit, you wouldn't see people bringing back luxury cars.

[Dion]

Originally Posted by Devils'Advocate

Shouldn't the market take care of itself?

I think it's starting to do that. Businesses close to the border are noticing the rise in cross border shopping. Then there's the ability to buy good on line. Sooner or later they're going to have to lower their prices if they want to keep thos canadians from shopping in the US.

Consumers have also put considerable pressure on retailers to reduce the price on the goods. Just recently retail ginats Zellers and Walmart have anounced price cuts.

http://www.thestar.com/Business/article/268573

The Hudson’s Bay Co. announced today Friday that it’s using savings achieved thanks the higher buying power of the Canadian dollar — it closed at well above US$1.03 today — to cut prices on nearly 300 targeted items at its Zellers discount department stores.

“We have worked with our vendors to obtain better deals on merchandise at Zellers,” HBC president Rob Johnston said in a statement.

“We understand that the rising Canadian dollar has led to a demand for lower pricing and this is our attempt to provide real savings for Canadian families.”

As for Walmart.......

Earlier this week, Wal-Mart Canada announced it would cut the price of video games to U.S. levels ahead of the pivotal Christmas shopping season.

But the company said today that Wal-Mart Canada, part of the world’s biggest retail chain, has been “seeking and achieving better prices from vendors for more than a year and translating them into lower prices for Canadians,” spokesman Kevin Groh said in an e-mail.

He added that Wal-Mart customers “have effectively been shopping with a higher dollar” all year, with the company able

[Bobblehead]

If you think retailers are gouging you, go ahead and start a business. Buy cheap goods from the US and make your fortune.

The head of the Bank of Canada handled the situation correctly earlier this week when he thanked the media for pointing out to the general public about the pricing discrepancy. Now (as Dion noted) Zellers succeeding in getting national media attention by announcing a price drop (pretty much a free advertisement courtesy national media outlets)

Unless there is proof of collusion among retailers (which the Competition Bureau exists to prosecute), there is nothing the government can do.

This act by the Minister is political grandstanding.

[Thunderball]

The way things are proceeding now is the best way for improvement to happen.

Big players are seeing greater market share forecast in peak season if they lower their prices. Others will not want to get steamrolled and will do the same.

[burn_baby_burn]

In my business we are lowering prices like crazy. We are making better profits than ever and selling a lot more than usual. The low US dollar is keeping our cash registers ringing.

[Dion]

Originally Posted by peter12

While I'm not really sure about the economics surrounding this, we really do live in a captive market with no outside options for consumers to pursue cheaper goods. Unless you want to spend $2000 on a plane ticket to China. Haven't there been accusations of producer monopolies artificially keeping prices high, such as the automotive industry?

One can buy most goods online as an alternative. Instead consumers like to whine how they're getting gouged. Besides, if enough people showed their displease by shopping on line, retailers might be forced to look at getting better deals from their distributers.

[jolinar of malkshor]

Originally Posted by Dion

One can buy most goods online as an alternative. Instead consumers like to whine how they're getting gouged. Besides, if enough people showed their displease by shopping on line, retailers might be forced to look at getting better deals from their distributers.

True, but a lot of saving vanish after having to pay Shipping and handling fees or broker fees.

[Dion]

Originally Posted by jolinar of malkshor

True, but a lot of saving vanish after having to pay Shipping and handling fees or broker fees.

Depends on how much you spend and who you buy your goods from. Some retailers offer free shipping depending on how much you spend.