Canadians going ga-ga for the Loonie

by J.J. Jensen
While it’s not the flood of “Beautiful British Columbia” license plates seen 15 years ago, a trip through local parking lots lately at least identifies more visitors from the Great White North than in recent years.
So what’s the noticeable increase all a-boot?
Local business leaders point primarily to the strength of the Canadian dollar, which as of last week was trading at 80 cents U.S., as the key to what’s bringing Whatcom County’s northern neighbors back to the U.S. side of the fence.

Eric Larsen, director of marketing at Ferndale’s Silver Reef Casino, estimates Canadians account for nearly half of all the casino’s business right now, partly due to the high value of the Canadian dollar.

But, while cross-border trips into Whatcom County are steadily increasing and many businesses are noticing a boost in business from Canadian consumers, some in the local business community say retailers should not expect a windfall of loonies.
“The short answer is obvious – the stronger Canadian dollar can do nothing but help retail sales in Whatcom County,” said Steven Globerman, Kaiser Professor of International Business at Western Washington University. “But how much is pretty speculative.”
Bellingham/Whatcom County Chamber of Commerce & Industry President and CEO Ken Oplinger said it would be wise not to expect times akin to the Canadian craze of the late 1980s and early 1990s.
That’s because Canadians today, he said, have more shopping options in their country than they did 20 years ago.
“If you went back to the 1980s and went to Richmond Center, the sorts of stores they had were no comparison to what we had here,” said Oplinger. “In Canada, it was all small, local boutiques. Now, a lot of international shopping options are available at malls across the Lower Mainland.”
Indeed, big-box stores such as IKEA, Home Depot, Wal-Mart and Best Buy are now in the Lower Mainland, as are popular retailers like Old Navy and Abercrombie and Fitch.
“There was no way Canadian retailers were going to sit and watch all those dollars go south,” said Hart Hodges, Director of Western’s Center of Economics and Business Research.
Whatcom County also isn’t likely to attract large numbers of the Lower Mainland’s growing ethnic population, Globerman said, because members of ethnic communities tend to shop frequently at stores specializing in foodstuffs and goods from their home countries. Few stores like those exist here.
There may not be a bonanza of Canadian business, this not to say there haven’t been local operations benefiting from the strong Canadian dollar.
Eric Larsen, director of marketing at Ferndale’s Silver Reef Casino, estimates Canadians account for nearly half of all the casino’s business right now. He points to a major advantage his casino has over its Canadian counterparts.
“Some of the things that differentiate us is that we allow drinking on our floor and smoking in our casino,” he said.
Hotels are also seeing sizeable increases in the number of Canadian guests.
John Cooper, President of the Bellingham/Whatcom County Convention & Visitors Bureau, said the number of Canadians utilizing the bureau’s Best Buys Program, a discount lodging promotion, increased 112 percent over last year.
From October 2003 to April 2004, he said, 311 Canadians made reservations through the Best Buys Program; from October 2004 through last month, 664 Canadians used the service.
Peter Paulsen, general manager of the Hotel Bellwether, estimates he’s seen 10 percent to 15 percent more Canadian guests over the last year and believes more economically priced accommodations are doing even better.
With the Canadian dollar now stretching farther in the U.S., Canadians who may have put off trips in recent years can now take one, he said, even if they’re traveling on a budget.
Overall, Canadians currently make up about 10 percent of Bellingham’s retail shoppers, said Hodges, citing a recent Western survey.
“Canadians were never the dominant consumer (here) but they were present or noted in all sectors,” he said.
The peak of Canadian spending in Whatcom County was in the late 1980s and early 1990s, when the Canadian dollar exchanged for more than 80 cents U.S., and approached 90 cents.
Canadians, at that time, were coming in droves to newly opened Bellis Fair or were crossing the border to fill up on gas and do grocery shopping for items under provincial regulation, like chicken and milk.
“Whatcom County flourished in no small part because of the influx of Canadian money that went down there,” said Lindsay Meredith, a professor of marketing and economics at Vancouver’s Simon Fraser University.
Then the Canadian dollar tanked in the mid 1990s, in part because the Canadian national debt began to rise. The Canadian dollar dropped below 70 cents U.S. and, eventually, neared 60 cents.
As fewer Canadians traveled south, many local businesses noticed a drop in sales, especially those at Bellis Fair, where Canadians had accounted for more than 10 percent of all shoppers.
“The mall was a big attraction to the Canadians and there’s nothing wrong with that,” said Perry Neumann, owner of Bellis Fair’s 1890 Caramel Corn Co., and an original shopkeeper at the mall. “It was huge and anybody who said anything different was not being totally honest. (The loss of Canadian shoppers) had a big, big impact.”
After the terrorist attacks of 9/11, Canadian border crossings dropped even more drastically, as the U.S. tightened its borders and casual travel between the U.S. and Canada became a thing of the past.
Annual southbound crossings at Blaine, Sumas, Lynden and Point Roberts, shrank from 25.7 million in 1992 to 9.8 million in 2002, according to figures from U.S. Customs, Blaine.
“If you have to stop at the border and there’s a one- or two-hour lineup, those dollars won’t come back to you and will be spent in Canada instead,” Meredith said.
About two years ago, though, businesses began seeing a bit of an increase in Canadian shoppers. As the U.S. dollar fell internationally, the Canadian dollar rose against it.
“As the American dollar falls off, the Canadian dollar seems to climb. The U.S. debt situation has a lot of the world’s attention and that’s hurt the dollar,” said Meredith.
However, as the Canadian dollar last year reached 85 cents U.S., there wasn’t a sharp increase in the number of southbound border crossings. Canadians didn’t return to shop here like they once did.
In the late 1980s and early 1990s, the general belief at that time was that goods were cheaper in the U.S. than Canada and that’s what was drawing Canadians here. As people have looked back, Hodges said, some believe it wasn’t all prices but prices of specific goods, like dairy products and technology, that drew them.
Meredith echoes beliefs that more shopping choices in Canada may be keeping more Canadians shopping at home.
“There was a perception that there was much more choice in the U.S.,” he said. “In the old days it was true but today it’s 100 percent incorrect.”
Canadians, though, have been coming to Whatcom County in greater numbers than before and more appear to be on their way back, as their dollar remains strong.
“Canadians have had a long affinity for things U.S., and when the Canadian dollar gains they love spending their dollars there,” Meredith said.
Local business owners can take advantage of that.
“Canadians know very much where Bellingham is but you have to remind shoppers to come back,” Meredith said.
Some business officials believe there needs to be a public awareness campaign that border waits aren’t as lengthy as they were a few years ago.
Since 2001, increases in staff and upgrades to the truck crossing have dropped wait times.
“For all businesses in Whatcom County, access at the border should be very much a priority in the future,” said the Silver Reef’s Larsen. “The harder we make it to come across the border means an immediate decline in customers.”
Currently, though, Larsen believes marketing efforts in Canada, such as print and radio ads, direct mailing and billboards near the Peace Arch and in Langley, have helped casino business.
Said Hodges: “Any marketing campaign should include a reminder that the border crossing is not as bad. That same campaign should have an element of ‘We like Canadians.'”
Cara Buckingham, marketing manager at Bellis Fair, said the mall continues to advertise in Canada but she believes stores still need to highlight greater selection.
“A lot of our shoppers from Canada say they come because of the selection of stores and the selection per store is so much greater,” she said. “If they have an incentive to come down here, they’ll make that trip.”< br />Also, Buckingham said, provide a pleasant shopping experience. Recently, Bellis Fair has begun providing amenities such as free gift packs for kids, with crayons and coloring books, and in the future plans to add family preferred parking spaces and more floral displays.
“Canadians have an appreciation for their environment and the experience they have,” she said. “It can be basic things like good customer service or clean restrooms and tables. Making sure people have a good experience now can help if (the Canadian dollar) surges down again. They’ll continue to make a decision to come down here.”
The Caramel Corn Co.’s Neumann said offering a good exchange also helps. Currently, his exchange is 24 percent.
“The Canadian customer will let you know in no uncertain terms if it’s not what they think is fair,” he said.
Many believe Canadians will always have some impact on business in Whatcom County.
“Bellingham, in and of itself, is developing critical mass,” said Meredith. “It’s attracting a manufacturing infrastructure and that will create the critical mass it needs to grow. But does it still do well because of the Canadian dollar? You bet your boots it does.”

 

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