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What’s next for cross-border spending in Whatcom and Canada

A mural adorns a side street just off Commercial Drive, a funky street for shopping, eating and people-watching in East Vancouver, B.C. With the Canadian dollar lagging, more Americans are heading north of the border to visit.
A mural adorns a side street just off Commercial Drive, a funky street for shopping, eating and people-watching in East Vancouver, B.C. With the Canadian dollar lagging, more Americans are heading north of the border to visit. TNS

It’s Canada’s turn to host the cross-border shopper, but it may not be at the level of spending seen in the U.S. when the loonie was strong.

That’s one conclusion from TD Economics, a Canadian firm that released a report about cross-border spending on Monday, Feb. 8. The report indicates that even with the expected increase of Americans visiting Canada this year, Canadian visitors will outspend their American counterparts more than 2 to 1.

Canadian visitors are projected to spend $20.5 billion Canadian in the U.S. this year (down about $4 billion Canadian from 2014), while Americans may spend $9.6 billion Canadian in Canada, the highest level in more than 10 years.

The flow of travelers has shifted in recent months as the Canadian dollar remains weak compared to the U.S. dollar. On Monday, Feb. 8, the loonie was just above 71 cents compared to the U.S. dollar, which is up 3 cents in recent weeks but down 10 cents compared to a year ago.

1.6 million How many more Americans entered Canada between January and November 2015 compared to the same period in 2014

This relatively sudden swing in the currency — the Canadian dollar spent much of 2014 above 90 cents compared to the U.S. dollar — has started to sink in with Canadians, who enjoyed several years of stronger spending power stateside. With the strong U.S. dollar, more Americans will visit Canada but shopping will be lower on their list of things to do, behind visiting family or friends, enjoying the holidays, and business trips, according to a survey done by Statistics Canada. Shopping ranked higher with Canadians coming into the U.S.

The survey results are similar to what Western Washington University’s Border Policy Research Institute found in 2013-14, said Laurie Trautman, associate director at the institute. She said several factors are in play as to why shopping is a higher priority for Canadians when crossing the border, including more retail variety and competition in the U.S.

Locally more Whatcom residents already are visiting Canada, she said. Across the northern border, an additional 1.6 million Americans entered Canada between January and November 2015 compared to the same period in 2014, an 8 percent increase.

“I would guess it is primarily for vacation and recreation,” Trautman said, noting the number of visitors into Canada probably will increase in the spring and summer.

Canada also may need to work on trying to get Americans to visit. The report pointed to a survey done by Global Tourism Watch, which asked Americans to rank places they want to explore. Canada ranked low in the survey, behind several European countries and Australia.

“Canada’s reputation as a land of natural beauty and spectacular scenery tends to resonate more among older visitors and less among millennials,” the report said, adding that a lack of new high-profile attractions in Canadian cities may be a contributing factor to the disappointing survey results.

We’re not going to see all the Canadian shoppers disappear, but the lines at Costco are going to be shorter.

Laurie Trautman, associate director, Western Washington University’s Border Policy Research Institute

In real estate, fewer Canadians are expected to purchase U.S. property because of the weaker purchasing power. However, authors of the report didn’t think there would be widespread selling of it by Canadians to take advantage of the strong American dollar.

“(Selling U.S. property) would likely result in a lifestyle change and most owners will be inclined to continue living in a lifestyle that they have become accustomed to,” according to the report.

In Whatcom County, Trautman expects a continued decline in Canadian shoppers as more people react to the exchange rate and re-orient their shopping north of the border. The one exception is online shopping, because those purchases are probably still worth it to Canadians, particularly if they already have a post office box in the U.S.

“For Canadians, I do think there is a price point and we’re probably hitting it about now,” Trautman said. “However, crossing south still avoids the congestion of the lower mainland; people know where to find what they want; and that the variety is still there. We’re not going to see all the Canadian shoppers disappear, but the lines at Costco are going to be shorter.”

Dave Gallagher: 360-715-2269, @BhamHeraldBiz

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