Do Good Toys Cost More in Canada?

Map of Canada

Map of Canada

The answer to the question “Do good toys cost more in Canada?” is a definite “No.”  And a definite “Yes.”

As Canadians, some 75% of us live close — very close — to the world’s longest undefended border, shared with the United States.  Canadians are, in a sense, bi-cultural:  we watch American television as well as Canadian television; we listen to American radio stations; we read American magazines, websites, and newspapers; and often, when the Canadian dollar is drawing close to parity with the U.S. dollar, we travel to the United States.

And, when we travel or watch television or browse websites, we shop — and when we do, we may notice a disparity between Canadian and U.S. pricing on similar (or identical) goods.  What on earth is going on, we wonder?  Are we being ripped off by Canadian retailers who often charge higher prices?

In almost all cases, the answer is no.  Canadian retailers are very focused on creating fair and reasonable prices for our customers.  Price differences between American and Canadian retailers on identical goods reflect some fundamental differences in the circumstances between the two countries.

The first difference, of course, lies in the two currencies and how they relate to one another, as well as how they each relate to other world currencies.  When the Canadian dollar falls in relation to the U.S. dollar, goods that we import from the U.S. become more expensive for us to buy.  When the Canadian dollar approaches parity, as it has done over the past year or so, American prices look better to us, as the Canadian dollar buys more than it did previously.  World currencies act in more or less the same fashion. Believe it or not, a change in the value of the U.S. dollar in relation to the Thai baht may mean a change in Canadian retail prices for certain products manufactured in or close to Thailand.  This sort of world currency fluctuation — which has become more frequent and pronounced over the past couple of years — can put the squeeze on importers, and Canada is a nation that relies heavily on imports.

The second thing that has an upward impact on Canadian prices is shipping cost.  Like it or not, there is an additional cost associated with bringing goods over the border —  for the supplier, there’s extra paperwork to be filled out, and brokerage costs to be paid, and a greater distance for the cargo to travel (just think how much more it costs to send a parcel across the country than next door.)  Fuel prices are steadily inching up, so that it costs more to truck goods across the border and from coast to coast.  All those costs generally get passed on to the retailer, and thus to the Canadian consumer.

American manufacturers and wholesalers also have a fundamentally different cost structure than do their Canadian counterparts.  We pay higher taxes, by and large, than do the Americans, with which we fund our excellent, universal, and free health care system, not to mention our comparatively inexpensive colleges and universities.  Americans may pay less for their retail purchases because of lower corporate and personal taxes, but it’s more than made up for by the health insurance premiums and medical co-payments demanded by their system — among those whose employer offers health-care benefits, the average American family’s insurance premium is around $14,000, of which the employer pays about $10,000 and the worker about $4,000 annually.  (And that’s for families without any pre-existing conditions such as diabetes, cancer, or heart disease.  They may not even be able to get insurance.)

Finally, in some cases, American companies furnish their Canadian retail customers with a Canadian dollar price list in which the Canadian prices are grossly inflated  —  way above what could be explained by the exchange rate and the cost of shipping (which is billed separately anyway, usually).  Most suppliers in this situation seem genuinely surprised when we point out this huge discrepancy between what an item would cost if we paid them for it in U.S. dollars and what they have decided the Canadian dollar cost will be.  Over the past few years, many American suppliers have decided to do away with the Canadian dollar price list altogether, so that Canadian retailers may now purchase directly from them at a lower cost.  This lower wholesale cost can then be passed along to the consumer as a lower retail price.

As Canadian consumers, we may always pay slightly more than Americans do for some goods and services because of these various factors, but Canadian retailers work very hard to keep prices as low as possible.  In our store, the ideal situation would be one in which the Canadian cost of an item is the same as the American cost, once currency exchange and shipping costs are factored in.  And we’re working on getting there, penny by penny.

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