The loonie has soared in recent months, but surprisingly this has had a minimal impact on retail sales, according to a study released in the Canadian Economic Observer.

The Canadian dollar jumped 44% between 2002 and October 2007, yet the number of cross border shoppers has only marginally increased.

There were an average of 1.9 million same day auto trips each month for the first nine month of 2007, compared with 1.7 million in 2002. This is in stark contrast with the 1980s, when small currency fluctuations resulted in a huge increase in same-day auto trips to the United States. The all-time high of same day auto trips peaked at 4.9 million in 1991.

Tighter border security following the September 11, 2001 terrorist attacks seems to be keeping Canadian shoppers at home. Border wait times and the costs of trips across the border also appear to curtailed the number of trips.

Vehicle purchases are an exception, with Canadians buying five times their 2002 value, or close to $1 billion, in 2007. While this makes vehicles the fastest-growing segment of cross-border shopping, this still still represents less than 2% of the total value of vehicles purchased by Canadians in the first nine months of 2007.

Canadians have not markedly shifted their in-person trips to online shopping . Shipments to Canada by public- and private-sector couriers, the dominant route to receive a product ordered online, show a steady increase since 1995 of $300 million a year on average. Rather than showing an exceptionally strong increase in 2007, growth has been below average.

The high value of the loonie, however, has had a significant impact on travel from the United States into Canada. Day trips from the United States to Canada have dropped by almost 50% or an average of 11.3 million trips since 2003. Overnight visits to Canada by Americans have also fallen.

Source: Cross-border shopping and the loonie: Not what it used to be. Canadian Economic Observer, Vol. 20, no. 12

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