C$-US$ parity puts squeeze on Canadian retailers

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VANCOUVER, British Columbia, Sep 27 (Reuters) Parity between the U.S. and Canadian dollars has American retailers eyeing cross-border business and Canadian consumers demanding better deals at home -- and going to court to get them.

The two dollars hit par last week for the first time since 1976, and Canadian radio stations soon talked of long waits at the border as shoppers sought U.S. bargains.

''It was tremendous,'' said Patti Crooks, general manager of the Aroostook Centre Mall in Presque Isle, Maine, which has long marketed itself to shoppers in neighboring New Brunswick - even using the Canadian-style spelling ''Centre'' in its name.

Retailers in northern Maine have seen business from Canada increase as the currencies neared parity, allowing some to offset falling sales to U.S. consumers stung by higher energy prices and a flagging economy, Crooks said.

The Canadian dollar, worth a fraction over a U.S. dollar on Thursday, has climbed some 62 percent since early 2002.

But parity, while a joy to U.S. retailers, has made some Canadian consumers angry that so many goods and products cost more in Canada than in the United States.

Bruce Cran of the Consumers Association of Canada said the group is hearing complaints about a range of goods, with some Canadian electronics retailers saying the wholesale prices they pay are higher than retail prices in the United States.

On www.amazon.com, a 4GB iPod Nano with video is on sale at 9. Canadian chain www.futureshop.ca charges C9.99.

A Toronto law firm filed a class-action lawsuit on Wednesday against several major automakers, alleging they conspired to make it more expensive for Canadian consumers to buy cars by discouraging cross-border shopping.

Similar model cars can cost thousands of dollars less in the United States than in Canada. In some cases the vehicles have been produced in Canada.

Bank of Montreal deputy chief economist Douglas Porter said Canadian retailers have been able to charge what they think the market will bear, but with the currencies at par, they should be prepared for consumer push-back.

''It won't be long before Canadians start to vote with their feet in much greater numbers,'' Porter wrote in an opinion piece, which noted the price differences cannot be explained entirely by duties, taxes and other charges.

HAS THE MARKET CHANGED? But some economists say retail market conditions have changed since the early 1990s, the last time the Canadian dollar was close enough to the greenback to make cross-border shopping by Canadians a hot topic.

More U.S. chains -- such as Wal-Mart Stores and Home Depot -- have opened Canadian stores, eliminating some of the incentive for shoppers to travel south, said Hart Hodges, director of Western Washington University's Center for Economics and Business Research.

''Ten or 15 years ago there were too many options that weren't available in Canada,'' Hodges said.

But Crooks said there are still enough U.S.-only chains to attract Canadian shoppers, and in some cases retailers that operate on both sides of the border do not offer the same goods in their Canadian stores.

Some U.S. retailers also fear tight border security could deter cross-border shoppers. The United States is expected early next year to require a passport for even short trips over the border by Canadian citizens.

A coalition of U.S. and Canadian chambers of commerce and border businesses issued a study on Tuesday that said the new rules, and the border delays they bring, could cost U.S.

retailers and tourism firms 0 million in lost revenue.

''It was important to get the (Canadian) dollar back up toward par. But if you've got three- or four-hour lineups at the border you defeat that,'' said Ken Oplinger chief executive of the Chamber of Commerce in Bellingham, Washington.

Wal-Mart pointedly issued a press release on Tuesday saying it acknowledged the new currency situation and would sell the much-anticipated ''Halo 3'' video game for C less than planned, making the price the same in both countries.

REUTERS SR DB1834

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