The eroding Canadian dollar has sapped the purchasing power of Canadians so much so that the once booming cross-border shopping industry has been forced into decline.Paul Chiasson/The Canadian Press
The Canadian cars that once rushed over the border from Toronto to Buffalo, Winnipeg to Grand Forks and Vancouver to Bellingham are slowing to a crawl.
The eroding Canadian dollar has sapped the purchasing power of Canadians so much so that the once booming cross-border shopping industry has been forced into decline. As the loonie continues to lose ground, figures released by Statistics Canada Thursday showed a 6-per-cent seasonally adjusted monthly drop in same-day car trips to the United States in January.
"The casual cross-border shopper has been knocked out of the game," BMO Nesbitt Burns chief economist Douglas Porter said. "As long as the currency stays at around these levels or lower, I really think the casual cross-border shopping is done."
Cross-border car trips are down a little more than 14 per cent from a year ago, one of the steeper declines in the past decade. "The only deeper drop we saw was during the financial crisis and the meltdown of the Canadian dollar at that time," Mr. Porter said.
Though the Canadian dollar surged higher Wednesday on news the U.S. central bank would not immediately raise interest rates, it fell back below 79 cents (U.S.) Thursday.
The loonie is down nearly 14 per cent over the past six months. The downward trend, driven by low commodity prices, healthy American economic indicators and a strong U.S. dollar, ends a long period of relatively consistent exchange rates. The Canadian dollar hovered from 90 cents to slightly more than parity between 2009 and 2014.
In contrast to the bustling cross-border shopping industry when the loonie was at parity, as it skirts closer to the 75-cent-mark, Statistics Canada data show residents staying closer to home. In January, Canadians took 350,000 fewer one-day trips south of the border than they did the same time last year.
Despite the falling numbers, Jim Soos, director of asset management at Pyramid Walden Co., which owns the Walden Galleria mall, a popular cross-border shopping destination in Buffalo, is not concerned the flow of Canadians rushing across the border will disappear. He insists that he still sees plenty of Ontario licence plates in the parking lot.
"There will certainly be some fluctuation in terms of Canadians," Mr. Soos said, "but over all I can tell you that through times when our U.S. dollar is worth more, we still see those Canadians coming. It's not as if it's ever dried up and completely gone away."
While American border towns are feeling the squeeze, Canadian malls and outlets are cashing in.
Toronto Premium Outlets in Halton Hills, Ont., has enjoyed a double-digit sales increases year over year, and Outlet Collection at Niagara, a shopping centre in Niagara-on-the-Lake, Ont., that opened last year, is already enjoying the windfall. Carly Rupcic, Outlet's tourism manager, said the mall has seen better-than-expected traffic over the winter. She chalks the growth up to Canadians doing their shopping closer to home.
"A lot of that traffic was coming down from the [Greater Toronto Area]. Those people were quite possibly people who would have been cross-border shoppers before but are staying in our area now."
Ms. Rupcic also noted the outlet centre is seeing increased traffic from the U.S., one indication cross-border shopping trends are beginning to reverse.
Though the number of Americans crossing the border into Canada fell nominally in January, down 1.4 per cent from December, the year over year figures are more encouraging.
"After hitting multidecade lows in the last couple years, it looks like the number of Americans coming to Canada is beginning to creep up a bit," Mr. Porter said.
He pointed to a 7.7-per-cent increase in Americans visiting Canada from 12 months ago.
Though Mr. Porter doesn't think too many of those Americans are heading north of the border to load up on Canadian merchandise, the trend still points toward a levelling of the playing field.
The ratio of Canadians to Americans crossing the border hit a record high in 2012 at 3 to 1. The latest figures drop the ratio to 2.4 Canadians crossing the border for every American.