Canadians are paying far more than Americans for the same products because of a systemic and unjustifiable markup scheme by many manufacturers, a retail expert says.
A report on Canada-U.S. price gaps found Canadians paying higher prices — more than double in some cases — for the same retail goods because of an industry phenomenon called "country pricing."
"Multinational brands, they have two different price lists … (one) for retailers in Canada, and (one) for retailers in the United States," says Diane Brisebois, president of the Retail Council of Canada. "And I can guarantee you that the price lists for retailers in Canada [have] prices that are between 10 to 50 per cent higher than the prices in the United States." In some cases, the final sale price is much more.
The report found a bottle of Bayer Aspirin, which costs $5.96 at a U.S. Wal-Mart sells for $13.86 at a Canadian one, a 132% difference.
Prices are local, and on the day of the investigation, the Canadian dollar was trading at 99.3 cents U.S.
The Senate finance committee's Wednesday report on the price gap contained other pronounced examples. Automobile tires cost 32% more in Canada, and a bottle of ibuprofen cost 70% more than the U.S. price.
Manufacturers claim that Canadian prices are higher due to labour and transportation costs, tariffs, the smaller Canadian market and other issues.
Brisebois says those issues should only cause slight price increases, but such high double- and triple-digit markups are indefensible.
"I don't care what the manufacturer says," she said, "You cannot justify 30%, 50%, 100% more in Canada than in the United States. It may cost a bit more to do business in one country versus another, but we're talking about 5% to 10%".
A May 2012 report from Bank of Montreal estimated that cross-border shopping is costing the Canadian economy approximately $20 billion per year, and Brisebois says the government is losing another $8 billion to $10 billion in tax revenue.
