The lower Canadian dollar will leave cross-border shoppers with less incentive to head south this holiday season.

Lower loonie to crimp cross-border shopping

B.C. retailers likely to benefit if currency gap prompts holiday shoppers to spend more money at home

The falling Canadian dollar may bring a merrier Christmas for local merchants and other small businesses by spurring B.C.’s legions of avid cross-border shoppers to instead spend their money at home.

Over the last two years the loonie has slid from $1.02 U.S. to around 88 cents and the decline has been close to 10 per cent from one year ago, when the Canadian dollar stood at 97 cents to the greenback.

“With the Canadian dollar being rock bottom it certainly makes any kind of retail prices in Vancouver look relatively more attractive,” SFU marketing professor Lindsay Meredith said. “A 12 per cent spread is a big number. That should certainly work in favour of the Canadian retailers.”

Canadian governments will also benefit by collecting more in sales tax, but Meredith said consumers will be the losers – whether they opt to pay the generally higher retail and wholesale markups in Canada or the higher exchange rate on their purchases in the U.S.

But he noted consumers should have a bit more money left in their pockets to spend this holiday season as a result of cheaper gasoline in the wake of the global drop in oil prices.

B.C.’s economy will also benefit in other ways from the lower dollar.

Besides making American imports more costly against Canadian products, B.C.-based exporters will benefit – particularly the forest industry.

“That can lead to more employment and more money to spend in retail,” Meredith said.

Then there are the tourism operators, who struggled to get Americans to come north when the loonie was riding high and their money didn’t go as far.

B.C. is now a bargain destination from the U.S. point of view.

“Operations like Whistler Blackcomb are loving this,” Meredith said. “And it’s perfect timing for the ski season.”

Even the panic over Ebola may actually be good news for Main Street B.C. if some winter vacationers decide it’s getting riskier to fly.

The deadly virus is likely to crimp demand for flights not just to Africa but also to Europe and prime snowbird destinations in the southern U.S., Meredith said.

“If that money stays home it’s more likely to be spent here.”

The Canadian dollar is well down from its recent highs against the U.S. dollar. Chart via xe.com.