CBJ – The lower Canadian dollar is of help to manufacturers who export products, but it causes problems for companies that depend on local support such as Dollarama, a national discount retailer that also purchases the majority of its more cheaply priced inventory from outside of Canada. The decline of the loonie means Dollarama will likely be forced to increase its current price threshold from $3 to as much as $4 by late next year.
“The probability is in the third and fourth quarter of next year, we’ll have to move our price points up,” CEO Larry Rossy said during a conference. “In general, we like to maintain our prices as long as we can, but this is really an exceptional time where the Canadian dollar has gone so poorly against the U.S. dollar and everything is bought in U.S. dollars. So to absorb 25-35% (in currency swing) is almost impossible.”
A great deal of the company’s merchandise is manufactured in China. A trip to the world’s most populous nation by Rossy next month will also be a determining factor regarding future price points, with the Chinese reportedly looking to increase their manufacturing costs.