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Canadian stores not thankful for strong loonie

U.S. retailers and malls are enjoying a surge of Canadian shoppers. But those spending sprees are siphoning off business at Canadian merchants.
Candian Shopping
Mary Thomson, left, and Linda Daly, right, both from Fort Erie, Ontario, talk during a break from shopping at the Walden Galleria Mall in Cheektowaga, N.Y. Thanks to the strong loonie, Canadians are getting great deals in the U.S.David Duprey / AP
/ Source: The Associated Press

Ida Gomes knows why the crowds at her local mall west of Toronto are noticeably smaller this holiday season. Like her, many shoppers are heading south to take advantage of Canada's booming currency to hunt for bargains.

Gomez hired a bus to take 56 of her closest friends to shop in Pennsylvania, where each dropped between between $500 and $1,000. "I got an evening gown for $30. That's unheard of here," she said. "The girls I went with were going crazy."

With the Canadian dollar, known as the "loonie," jumping as much as 16 percent in value this year against the U.S. dollar, U.S. retailers and malls are enjoying a surge of Canadian shoppers. But those spending sprees are siphoning off business at Canadian merchants, which are struggling with sales declines during the critical holiday season.

"This isn't just happening to stores and malls along the border, this is a Canadian phenomenon," said Rick Woodward, marketing director of The Pen Centre, a mall in St. Catharine's, Ontario, where sales fell 11 percent in September and another 10 percent in October.

Nearly two in three Canadians live less than 62 miles to the U.S. border, and Statistics Canada, the federal government's statistical arm, said the overnight car trips to the United States rose to almost a million in September, the highest level since 1993.

Profits fell 33 percent in the August-October quarter at sporting goods retailer West 49 Inc., based in Burlington, Ontario, and chief executive officer Sam Baio warned that holiday-season sales will hurt in part by weaker retail conditions in Ontario and cross-border shopping.

A recent Canadian Press-Harris/Decima survey found that 17 percent of Canadians polled had traveled to the U.S. to shop in the previous two months, spending an average $607 each.

"They're more confident in the economy than at any other time they've ever been in the 25 years we've been measuring," said pollster Bruce Anderson. "Put all those together and you've got a pretty big phenomenon."

Canadians made up at least 20 percent of business since Thanksgiving at four malls operated by Taubman Centers Inc. along the Canadian border, said Karen MacDonald, a company spokeswoman.

At the University Mall in South Burlington, Vt., Canadian business is up about 20 percent for the year, according to marketing director Geri Ann Higgins. "There are some waits at the border, but they don't care. They'll wait for a deal," she said.

"We've been coming across, and we'll continue to do so," said Montreal resident Shai James, who with his wife Stephanie and 6-month-old daughter Zoey were shopping at University Mall. "For small things, it's not worth the trip. For bigger items, absolutely."

Although prices in Canada have begun to drop, Diane Brisebois of the Retail Council of Canada told a parliamentary committee last month that prices are anywhere from 20 to 60 percent higher than in the U.S.

And that's a reality that drove Torontonian Linda An, 29, and two friends to Michigan over Thanksgiving weekend. She has been stateside a few times since the dollar reached parity.

She spent about $1,400-1,500, but it was still a bargain, she said. Nine West boots she had seen in Toronto for $280, plus tax, were $59 in Michigan, including tax. DVDs were half the price as back home.

"I refuse to shop in Toronto any more," said An.