Earlier today, the Retail Council of Canada (RCC) issued a news release and its submission to the Standing Committee on National Finance regarding retail pricing in Canada. The Committee commenced a study of the reasons for price differences in Canada and the United States last fall, and has heard from a wide spectrum of witnesses, including from government (the Competition Bureau, Canadian Heritage, Transport Canada, CBSA and Department of Finance), the private sector, academics and industry associations and groups.
In addressing the Committee, the RCC’s President Diane Brisebois urged them to “help set the record straight about the real causes of price differences in Canada versus the United States”.
According to the RCC, Canadian retailers are confronted by the following factors that impact retail pricing in Canada: (i) import duties on finished goods, (ii) supply management affecting food product prices (i.e., marketing boards that impact the prices of dairy, poultry and other products), (iii) vendor pricing (i.e., higher prices for Canadian retailers) and (iv) regulatory harmonization (e.g., in the book industry, in relation to which the RCC said Canada was the “poster child” for regulation leading to higher book prices). The RCC particularly emphasized existing “outdated” tariffs for adversely impacting Canadian retail prices.
The RCC’s submission discusses, among other things, the Canadian retail industry and suggested areas for government action (in relation to country pricing, duty remission on imported consumer goods, supply management and regulatory harmonization/red tape reduction).
Interestingly, the RCC did not address any competition or marketplace concentration issues in its submission, which is interesting given the high level of consolidation in many Canadian industries (including in some retail segments), except to comment on increased foreign competition:
“These soft demand conditions will, combined with a number of other elements, change the competitive dynamic in Canada’s retail industry. Growing consumer use of the internet has greatly increased price transparency. Parity with the U.S. currency has encouraged consumers to compare prices across the border, and indeed to shop in the U.S.. New foreign competitors continue to enter the Canadian market, bringing world-class competitive capabilities. Slightly more than half of the members that participated in RCC’s research expect their retail prices overall will be lower than in 2011. Only one-third expect their retail prices will rise. For the latter group, commodity costs are sighted as the reason for higher prices (e.g., food, building materials, etc.). Many of the respondents have planned further initiatives to reduce costs and improve efficiencies which should help retailers keep prices competitive. Retailers will be helped further by a manageable pace of inflation in other operating costs such as transportation, occupancy, and labour costs.”
For the Retail Council’s news release and submission see:
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