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Americans may have expensive drugs, housing and health care, but they sure have cheap toys!
By: Ish Theilheimer and the Straight Goods team
Canadians often get the impression that Americans are better off because they appear to have more and cheaper "toys". In fact, appliances and big-ticket consumer items appear to be one of the few consumer purchase categories generally and considerably cheaper in the US than Canada.
A two-week Straight Goods survey has shown that Americans pay more than Canadians for many consumer goods - and, in many cases, a lot more for basics like housing and drugs. But Americans can make up some ground on appliances.
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Our team found price spreads ranging from 20% on washing machines of similar quality to 55% on one model of personal CD player |
Instead of comparison shopping in survey cities as we have done with other categories, the Straight Goods team went online to see what the big retailers are offering in the US compared with Future Shop here. We used Future Shop as a kind of baseline standard - a discount retail chain with good everyday prices and a good reputation. Despite Future Shop's good prices, we found significant bargains in the States.
For instance, the same Hewlett Packard Pavilion 6640C 500 MHz, 64 MB, SDRAM computer that sells for $1349.99 CDN ($931.49) at Future Shop in Canada, lists for $799.98 US ($1159.97 CDN) at Staples in the US. That's 16 percent more, before tax, and while most states have sales tax (often lower than Canadian provincial sales taxes), there is no GST in the US, which makes the difference 23 percent or more.
The difference is not always so extreme, and in the case of some items we priced, Canadian prices were lower. On the other hand, the Panasonic SLS-361C Personal CD player was 55 percent more expensive in Canada ($179.99 CDN vs $79.99 US).
Sales flyers received from readers bears out this pattern. A Sears flyer from Florida offers a Kenmore Super Capacity washer for $399.99 US (about $580 CDN). A similar washer in a Canadian sales flyer goes for $699 CDN ($482 US) or about 21 percent more.
Why the big spread on these goodies when other consumer prices are similar on both sides of the border, if not better in Canada? Economist Mike McCracken of Infometrica in Ottawa suggests that more competition is driving prices down in the States.
"Retail margins tend to be bigger in Canada," says McCracken. "In the US, retailers are under a lot of pressure from Internet shopping and big box stores." He cautions, though, that bargains in the US may not be all they seem due to subtle variations in quality of items sold by the deep discounters.
He tells of going to a Walmart store while on holiday with his family and buying six seemingly identical T-shirts. On closer inspection, each was made in a different country. This may occur with appliances, with competing stores offering slightly different products that appear identical but are not, a common practice with deep discount retailers.
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ITEM |
COST IN CANADA |
Exchange Value US |
COST IN UNITED STATES |
Exchange Value CDN |
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Hewlett Packard Pavilion 6640C 500 MHz, 64 MB, SDRAM |
$1349.99 CDN
(Future Shop) |
931.49 |
$799.98 US
(Staples) |
1159.97 |
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Hewlett Packard M50 15" monitor |
$349.99 CDN
(Future Shop) |
241.49 |
$249.98 US
(Staples) |
362.47 |
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Canon BJC-6000 colour printer |
$299.99 CDN
(Future Shop) |
206.99 |
$179.98 US
(Staples) |
260.97 |
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Kodak DC240 Digital Camera |
$799.00 CDN
(Future Shop) |
551.31 |
$499.98 US
(Staples) |
724.97 |
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Brother PPF770 plain paper fax |
$229.99 CDN
(Future Shop) |
158.69 |
$119.98 US
(Staples) |
173.97 |
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Panasonic SLS-361C Personal CD player |
$179.99 CDN
(Future Shop) |
124.19 |
$79.99 US
(J&R Electronics) |
115.98 |
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Samsung 19" television |
$279.99 CDN
(Future Shop) |
193.19 |
$169.99 US
(J&R Electronics) |
246.48 |
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Panasonic PV 9662 VCR |
$349.99 CDN
(Future Shop) |
241.4931 |
$179.99 US
(J&R Electronics) |
260.98 |
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Panasonic 1.0 cubic foot countertop microwave |
$219.99 CDN
(Sears Canada) |
151.79 |
$119.88 US
(Sears USA) |
173.82 |
David Easden, group product manager at Future Shop’s head office in Vancouver, says a number of factors influence the higher Canadian prices. “It is more expensive to operate a business in Canada,” he says. Higher wages, more regulation and smaller markets all contribute. Easden also says “Warranties tend to be longer in Canada, where they tend to be one year. It’s often 90 days in the States. That makes the operating costs higher for retailers and manufacturers.” But it results in better service for customers.
Easden agrees with McCracken that margins are “higher but not substantially” and that “to a certain extent the level of competition is lower” in Canada.
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