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Sat, 24 Nov 2012 21:30:00 GMT | By Deirdre McMurdy, MSN Money

Is Black Friday Canada’s new Boxing Day?

The encroachment of Black Friday into Canada is threatening traditional Boxing Day madness sales.


Deirdre McMurdy

It’s hard to imagine a more damning indictment of the human condition than the spectacle of shoppers lining up in the middle of the night to buy fleece pullovers at a Black Friday sale. Has it really come to this? And in this day of Internet-fuelled comparison shopping, is Black Friday even a thing anymore?

Well, yes it has and yes it is.

Even those who find the whole spectacle depressing must concede that Black Friday is a crucial economic indicator — all the more this year as Americans face the threat of a “fiscal cliff” if Congress doesn’t hammer out a budget compromise by the end of next month. Because consumer spending still represents about two-thirds of the U.S. economy, the 2012 results will be viewed as an important gauge of consumer confidence and retail prospects.

Last year, just a few hours after giving thanks for what they already have, 226 million Americans dashed out to spend an average of $398.62 (for a total of $52.5 billion if you do the math) on retail merchandise. In fact, things were even more intense than usual in 2011 because Wal-Mart — as it tends to do — decided to ratchet things up: it opened its doors to bargain-starved customers at 10 p.m. on the Thursday before Black Friday.

The use of Twitter and other forms of instant messaging have also helped to stoke the frenzy over the best deals to be had.

But Wal-Mart isn’t the only retailer attempting to squeeze every single dime from shoppers who are already pre-programed to head to the mall on that specific day. Canadian retailers (led by a growing number of big-name U.S. stores here) are launching a valiant effort to mimic the U.S. tradition and prevent “leakage” — the slightly disturbing retail term for the consumer trek across the border to spend money.

Domestic retailers are right to be concerned: the latest data shows that retail sales were flat in September as debt-burdened Canadians facing an uncertain job market kept their wallets in their pockets.

For those who are set to shop, the siren call of cross-border deals is more alluring than ever. The parity of the Canadian dollar has levelled the playing field. And, those who stay overnight in the U.S. can now bring back $200 worth of merchandise duty-free, compared with the previous $50 limit. Anyone staying more than two days can haul back $800 worth of merchandise.

A survey conducted by RedFlagDeals found that 63 per cent of Canadians surveyed now expect greater bargains on Black Friday than on Boxing Day. Related data shows Canadians spent 8.3 per cent more on Black Friday in 2011 than they did a year earlier.

Clearly this phenomenon has legs.

At least one of those legs is the chronic retail price differential between Canada and the U.S. Even the strength of the Canadian dollar has done nothing in recent years to materially reduce prices for the same goods from multinational retailers.

Although responsibility for that price gap tends to get passed around like a hot potato, the Retail Council of Canada insists that a small domestic market means that large multi-national vendors can charge prices that are 10 to 50 per cent higher for the same items than in the U.S. The Retail Council also dishes out blame to the federal government’s “outdated” import duties (which run as high as 18 per cent on certain categories of goods) and a general lack of harmonization on standards.

Economists at the Bank of Montreal estimate that Canadian shoppers pay an average of 20 per cent more for identical goods. In part, they conclude, that’s because companies are more focused on winning — and keeping — a share of a large, high-profile and influential U.S. market. And pricing is one strategy to accomplish that goal.

Of course for those who are too fancy to stand in line for discounts, there is the more discreet and increasingly popular option of Cyber Monday. The day after the Thanksgiving weekend has become increasingly crucial for the e-commerce sector because shoppers spend an average of $245 on items they didn’t find on sale — or like — the previous Friday.

All of that said, every discretionary retail dollar that’s spent on either Black Friday or Cyber Monday drives a stake into the heart of a noble Canadian tradition: crushing one another for bargains the day after Christmas.

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