Saturday, December 1, 2007

Loonie effect on Canadian business

Canadian Loonie has been strengthening against US dollar for quite some time now. Last month it hit parity with the US dollar. Although, the prices for Heaven Fresh products in Canada have been higher than the prices in the US from the very beginning, we have been getting much more calls and e-mails from Canadian customers complaining about the higher prices. Since the Canadian dollar is equal to the US dollar, Canadian consumers expect the US and Canadian prices of various products to be the same as well.

The cost of doing business is higher in Canada and the sales volume is lower therefore if we try to reduce the prices in Canada, we will simply be out of business in 6 months. However, it is very difficult to make customers understand the cost difference. Therefore, to make them happy,  we end up offering discounts to the customers who are really upset about the price difference.

Our prices in Europe and Middle Eastern offices are even higher than Canada due to the similar reasons, but we do not face the same challenges as we face here in Canada because customers in those countries do not have the luxury of driving a couple of hours to the largest economy of the world to buy cheaper goods.

I totally understand consumers' frustration in Canada for paying higher prices for the same products than the US consumers as I was in the same shoes before starting the business. But running Heaven Fresh for last few years has made me more aware that although in North American  we, the Canadians,  live in a separate country.  The government policies, the business environment and the costs of running a business are different here.  As Canadian citizens, we enjoy a lot of social benefits which the US citizens do not and the higher product prices are a small payback in return for all that. What do you think?

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