Topic: What can consumers do to help Canadian retailers with pricing

[toolatecrew]

This can be moved if needed because it does not deal with only vehicle pricing.

I was motivated to start this by a thread in the tire forum. I recently compared a tire an wheel package from 1010 tires in Canada to Tire rack in the US. The difference in price after shipping duty and exchange was over $500 or more than 25%.

The explanation I get form most Canadian retailers(this includes tires, vehicles and other equipment ) is usually" The manufacturer controls our cost pricing. They won't sell to us at anywhere near the cost of US so we can't match that price.

You should buy from us for better service, less hassle or my favorite support Canadian business otherwise it will eventually effect you!

My question is what can consumers do to help retailers sell us products at comparable prices to the US. I'm willing to pay a bit extra for service or local convenience. But not 25%. If I do personally pay that extra 25% premium to buy in Canada thus maintaining or increasing their sales volume will this result in a price drop down the road for me?

If I pay an extra 6000 dollars for my Subaru in Canada what does that do for me other than say let me not have to send in receipts for warranty work? What can I as joe consumer do to make Subaru NA stop treating Canadian dealers unfairly?

I need to pay for things with after tax dollars that I earned. I am not getting many answers from retailers how spending more of my after tax dollars to buy local will change things for the future or how the few if any benefits will offset the $ I save that could be spent elsewhere. If the system will remain the same no matter what why should I as a consumer not make the choice that saves me the most money. If you can't beat em why not join em?

[Thinking Out Loud]

Vote with your wallet.  Car prices 'dropped' when the dollar hit parity and people started flooding across the border to pick up cars.

Corporations only listen and speak in 'dollareese'. 

[sailor723]

I was just about to write this when Thinking Out Loud's post appeared. He's right. The only real power we have as consumers is the ability to choose not to buy from a particular source.

[PJungnitsch]

Something that helps is to have an idea who is charging big price differentials and who isn't. AFAIK Subaru, for example, has a high 'Canadian markup', as does Honda and to some extent Toyota. Chrysler on the other hand almost prices at par.

People do seem to vote with their wallet, number wise Chrysler does very well in Canada compared to the US, and Subaru poorly, almost niche level.

Presumably some Canadian distributors choose to go with low sales/high profit per sale vs high sales/low profit.

[toolatecrew]

The suggestion to vote with your wallet appears to be only moderatley effective though and in very few situations.

For cars many manufatcurers simply kept prices the same but threw up atrifical abrriers to discourage cross border sales. From denying warranty, to 1000 K recall letters to simply punishing US dealers for selling to canadians.

In the case of tires Nathan at 1010 tires tells us that manufacturers simply don't care where you buy from . They still get the sale regardless of you buy from 1010 tires or tire rack. They set their Canadian prices to the retailer much higher. Me buying in the US really has no effect on the Canadian retailer in terms of lowering the price.

I guess what I am asking is if the incentive for me to buy in the US is a huge $ savings but Canadian retailers want my business what can they offer me to make me give them there business? What can I do to ENABLE retailers to be price competative enough to support them.

If its truly the manufactuer forcing the high wholesale prices on Canadian retailers is there anything I can reasonably do to change that?

[johngenx]

If the manufacturers are charging lower wholesale prices in the US, they are earning less money on each tire.  Therefore, each tire we buy in the US costs them the difference between the Canadian and US wholesale prices. 

This hurts Canadian retailers, and hurts our local economies.  However, it's tough for many families to afford new tires thanks to these higher prices.

What really pisses me off is that companies want unilateral free trade.  Free trade to move their goods across borders, but not free for consumers to shop on either side.

[No H2O]

You should buy from us for better service, less hassle or my favorite support Canadian business otherwise it will eventually effect you!

Is that what they say?

What better service? I already get great service shopping in the US; a toll free number to call or incredibly well put together web sites like Pelican Parts for on-line ordering, etc.

Less hassle? I don't consider getting paid $150 an hour or more a hassle. On recent and many orders, that is what I get paid for my time to cross the border after all expenses (gas & bridge toll) are taken into account.

Support Canadian business? Why don't they support Canadian consumers instead by cutting their margins. Like the owner who tells me he isn't making any money...but is driving off in his A8 or another one in his Z8. Jeez, maybe I should get a minimum wage job (not making any money) so I too can get an R8 or Carrera GT.

Its hard not to get sarcastic with the BS business owners feed us.

BTW...got another order going out tomorrow..stateside of course...43% savings. 

[No H2O]

I guess what I am asking is if the incentive for me to buy in the US is a huge $ savings but Canadian retailers want my business what can they offer me to make me give them there business?

Simple, meet the price.

I once had a parts order for a restoration. It amounted to about $1000 from the US. I asked the local dealer to give me a 10% discount to meet the price. The idiot had to think about it. Lets see now...38% of $0 or 28% or $1000...tough decision.

[toolatecrew]

You should buy from us for better service, less hassle or my favorite support Canadian business otherwise it will eventually effect you!

Is that what they say?

What better service? I already get great service shopping in the US; a toll free number to call or incredibly well put together web sites like Pelican Parts for on-line ordering, etc.

Less hassle? I don't consider getting paid $150 an hour or more a hassle. On recent and many orders, that is what I get paid for my time to cross the border after all expenses (gas & bridge toll) are taken into account.

Support Canadian business? Why don't they support Canadian consumers instead by cutting their margins. Like the owner who tells me he isn't making any money...but is driving off in his A8 or another one in his Z8. Jeez, maybe I should get a minimum wage job (not making any money) so I too can get an R8 or Carrera GT.

Its hard not to get sarcastic with the BS business owners feed us.

BTW...got another order going out tomorrow..stateside of course...43% savings. 

In some cases what they say is true. Especially for the many of us that don't live within driving distance of the border.

Tires as an example:

Have bought from a local shop and when tire turned out to have issues it was a quick trip down the street. They came out looked at it in the yard. Siad yup its a problem. Bring it around back we'll out a new tire on. No need for a tire rep. No emails nothing. That's service. Can't get that online or from the states.

BUT when you save $500 I can wait a little longer for service or even BUY a new tire at my own cost and still come out quite a bit ahead.

Less hassel:
I'm anxiously waiting for my tires and rims to show up but it will be at least next week. If I bought local or even online in Canada I'd likley have them sooner.

But for $500 I can wait.

Support Canadian Business: Some of these people are myneighbours or people I know. They have kids to feed. They need to make a living too. They run businesses that support my business and give ME a job too. They do need to make some margin and in my most recent example I'm inclined to belive that they don't have an extra 25% margin in there to cut. You need to make money.

So as I said its not like I don't belive some of the benifits or arguments Canadian retailers give to buy from them BUT everything has a price. The consumers are NOT the bad guys here. Many of us are willing to pay a premium for service or to support local business but the premium is simply much too high for the benifit we get.

[Ex-airbalancer]

It appear there are not many business owners here because it appear people know very little about small business in Canada

[No H2O]

Tires as an example:

Have bought from a local shop and when tire turned out to have issues it was a quick trip down the street. They came out looked at it in the yard. Said yup its a problem. Bring it around back we'll out a new tire on. No need for a tire rep. No emails nothing. That's service. Can't get that online or from the states.

BUT when you save $500 I can wait a little longer for service or even BUY a new tire at my own cost and still come out quite a bit ahead.

True, but do you know how many times in my long life as a consumer that I had to take something back...once! I'll take those chances.

And the time I got a part in error (two of the same side), the business paid for all shipping, there and back. Now that is service!

They do need to make some margin and in my most recent example I'm inclined to belive that they don't have an extra 25% margin in there to cut. You need to make money.

Well I need to save money because for any money I save, it improves my quality of life...not the business owner's. I know quite a few of them...they all live far far better than I do, which is their right, just as it is mine to shop where I please.

Many of us are willing to pay a premium for service or to support local business.

I'm not in the first case. I am in the second case when they wise up.

[No H2O]

It appear there are not many business owners here because it appear people know very little about small business in Canada.

Having worked in both car and motorcycle dealerships in their parts department, I saw the markups. Enough that I got 30% off as an employee with plenty left for profit.

So please, enlighten us!

[initial_D]

From my experience in retail, margins and percentage markups on parts and finished goods are far from equivalent. Selling and 42" TV vs a HDMI cable yields about the same amount of profit, in terms actual amount in dollars. In some case, with the CC surcharge, there is no profit on big dollar items. Same can be say selling a laptop vs Antivirus software vs a wireless mouse.

Retail businesses are at a huge dis-advantage in price competitiveness.

It appear there are not many business owners here because it appear people know very little about small business in Canada.

Having worked in both car and motorcycle dealerships in their parts department, I saw the markups. Enough that I got 30% off as an employee with plenty left for profit.

So please, enlighten us!

Sounds like you were working within One Brand / Manufacturer only, yes? If so, that is almost monopoly within that territory.

[tpl]

I can think of long term answers to the problem but no short term answers.  Long term answers would involve forming a proper customs union with the USA, adding 100 million working age  people ( and jobs for them!) to Canada or even joining the USA. 

In the meantime:

I note that Amazon.ca manages to sell books at lower than the US$ marked price, that is, much lower than the Cdn$ marked price.   Some of this is because they are saved from Cdn regulation by having no physical presence in Canada, some is 'cos they have huge volumes without bricks and mortar presence anywhere.

So I wonder if the Tire Rack could do the same for Canada if it chose to.   Some more authorized dealers ( installers)  here, dealing with someone other than UPS to ship and so on.  Would this help?  Ought to if they were serious about it.

As afar as I can see its the border and the shipping are the killers. If TR did its own brokerage and I think that all that requires is to look up whether a given product is dutiable under NAFTA.  Shipping I believe would solve itself one they started shipping a few thousand tires/week to Canada rather than a few hundred. Must be many Cross border capable shipping companies who would love a nice regular Tire Rack contract.

[blur911]

Huge amounts of money cross the border in industrial settings too.  Canadian pricing makes it the only sane choice many times 
For example, a couple of weeks ago at work we were looking for a piece of aluminum plate. The local Russelsteel dealer wanted $450 and it would take 3 weeks.  A quick order to the McMaster-Carr website and it's here in 3 days for $150USD. 
You could double that price with shipping and duties and it would still be the only choice.
We always try to source locally, but how can we justify paying 3 times as much to buy Canadian to the shareholders?

[Guy]

That's globalization, internet communication and cheap transportation all together creating impossible competition for the small retailer.

Case in point, I was looking for high end wheels for my road bicycle. Set my choice on Shimano Dura-Ace Carbon Wh7850. Local retailer price: $1599 + tax. OK, he was willing to let them go for that price, tax in. Chain Reaction Cycle in UK sells those for $660 CDN and free shipping. Include the taxes when they land in Canada and my total was $745 per set. I ended up buying 2 sets.

I'm sure his cost form the local distributor was higher than what I paid.

Maybe the local retailer has to change it's business model and order his stock from the cheapest source??

[toolatecrew]

That's globalization, internet communication and cheap transportation all together creating impossible competition for the small retailer.

Case in point, I was looking for high end wheels for my road bicycle. Set my choice on Shimano Dura-Ace Carbon Wh7850. Local retailer price: $1599 + tax. OK, he was willing to let them go for that price, tax in. Chain Reaction Cycle in UK sells those for $660 CDN and free shipping. Include the taxes when they land in Canada and my total was $745 per set. I ended up buying 2 sets.

I'm sure his cost form the local distributor was higher than what I paid.

Maybe the local retailer has to change it's business model and order his stock from the cheapest source??

I agree with the premise but the problem seems to be is that Manufacturers simply don't value their Canadian distributors.

In order to be an "Authorized" dealer  they need to buy from the source the manufacturer directs them to. But being an authorized dealer does not give them advanatge of the best pricing. It gives them ability to maybe offer warranty service others can't but that's only effective on certain items and its only worth so much to consumers.

If these autorized dealers aren't bring in above average profits for the manufacturer (by buying at high prices) then they feel they don't need them.

If Jose tire won't buy 100 tires at 200$ each then fine I'll sell 200 tires to Supertire distributors in the US for $125 a pop and make more profit.

These local retialers only survive so long as the majority of the market clings to the standard (comfortable ) way of doing business face to face or locally. I know my parents would never buy tires online. They are always going to go to the local guy becuase that's what they have always done. As the demographics change and more and more younger people come into the market for say tires that are comfortable buying online the local retailers will find it harder and harder.

Its going to take some time but eventually a lot of these guys are going to get squeezed out becuase the customer base will eventually change to a point where most will feel OK shopping online.

Even though I buy things online there are still things I will pay quite a bit more for to buy from a place I can get face to face service. Audio equipment being one. I know I can get stuff much cheaper from a non appoved online vendor but Its just not worth the hassel to me if something breaks to be without my TV or home theatre for a long time if something breaks.

The more mass market the product becomes the less brick and mortar vendors have to offer.

[johngenx]

Some times things just need a shake up.  Years ago climbing and backpacking gear was super expensive in Canada.  Prices were very high compared to the US.

Some outdoor enthusiasts got pissed off, and began a buying cooperative to make orders from US distributors.  Mountain Equipment Coop was born.  Retailers were put under pressure, and passed that pressure along their suppl chain.  Within a fairly short time, all Canadian retail prices for outdoor gear dropped.

So, the market was altered by a group of consumers shopping elsewhere.  Hhhmmm.

[ArticSteve]

For cars many manufatcurers simply kept prices the same but threw up atrifical abrriers to discourage cross border sales. From denying warranty, to 1000 K recall letters to simply punishing US dealers for selling to canadians.

Canadian v. US vehicle pricing is protected and will remain protected because of the over whelming demand for financing and leasing.   It's just that simple. 

[toolatecrew]

For cars many manufatcurers simply kept prices the same but threw up atrifical abrriers to discourage cross border sales. From denying warranty, to 1000 K recall letters to simply punishing US dealers for selling to canadians.

Canadian v. US vehicle pricing is protected and will remain protected because of the over whelming demand for financing and leasing.   It's just that simple. 

I'm not sure I fully belive that.

1. Many companies have abandoned leasing almost entirely.
2. If financing was such a powerful barrier why did so many companies feel the need to do things like threaten US dealers for selling to Canada, making outrageous requirements (BMW and their 1K recall letter and instrument cluster changes) or denial of warranty.