Companies in the United are gaining more profit from Canadian shoppers after the Canada's government increased the limit for cross-border shopping, according to Nielsen research.
A study from Nielsen research showed that manufacturers and retailers in the United States such as Wal-Mart Stores, Inc (NYSE:WMT) and Target Corporation (NYSE:TGT) are reporting better profits since Canada implemented new rules for cross-border shopping rules on June 1st, 2012. Under the new rules, the cross-border shopping limit for visits in the United States for more than 24 hours increased four times from $50 to $200. Canadian residents who visited the U.S. for more than 48 hours may return to Canada with duty-free products worth as much as $800, up from the previous $400 limit.
Based on the Nielsen’s research, the number of Canadians shopping in the U.S. border markets including Buffalo, N.Y. and Seattle, Washington increased by 24 percent from 2011. Over the past year, the research firm found that almost 1 million Canadian households travelled south to shop and save money.
Carman, Allison, director of consumer insights said, “Canadians love a good deal, and they’re willing to travel to get it, and the holiday season was a perfect time for Canadian consumers to take advantage of better selections, a wider array of brands, and lower-priced goods across the border.”
Allison also explained that Canadians are stretching their spending power south of the border because their currency remains higher that the U.S. dollar. “Canadians are flexing their spending muscle south of the border as the Canadian dollar remains strong against the U.S. Greenback. Roughly, 60 percent of Canadian travelers to the U.S. return to Canada the same day. Thus, one could speculate that a large portion of those travelers is engaging in cross-border shopping” Allison said.
Based on data from Nielsen research, during the third quarter this year, Canadian visits across to U.S. retailers increased by 20 percent, and the total dollars spent climbed by 10 percent.
According to the research firm, the penetrations of Canadian shoppers to U.S. stores nationally increased by 1.6 percent, and 1.9 million traveled overnight by car, a 7.5 percent increase; the highest quarterly record since 1972.
“The overall amount that Canadians spend across the border also continues to increase as does the number of cross-border shoppers. However, the dollars and trips per shopper have become diluted, due to the influx of new, first-time cross-border shoppers,” added Allison. Canadians spend around $846 (national average) in cross-border shopping. Households in British Columbia spend the highest amount in cross-border shopping at around $1,126 compared with the national average.
U.S. companies including Wal-Mart Stores, Inc. (NYSE:WMT), Target Corporation (NYSE:TGT), The Home Depot, Inc. (NYSE:HD), and Lowe’s Companies have been aggressively expanding their business operations in Canada. Last year, Target acquired Zeller’s while Wal-Mart allocated $750 million to open additional stores in the country. Target is expected to open its first 124 Canadian stores by March 2013