With the Canadian dollar hovering around 80 cents US, some small Centretown businesses are feeling the pinch.
The cost of importing foreign goods has surged compared with months before, and with no immediate recovery projected, business owners are absorbing the cost increase in hopes of seeing the light at the end of the tunnel.
Shelley Taylor, owner of Centretown sex shop Venus Envy, says her business buys a large percentage of the shop’s products from suppliers in the U.S.
“We’re paying more for products and we can’t necessarily turn around and sell those items for more,” she says. “We just take a loss on them.”
These increased costs leave business owners such as Taylor looking for ways to cut back on their costs. She says because rent and products are fixed costs, some business owners cut staff or decrease their hours in order to get by.
“We haven’t laid off staff because of sales, but a lot of small businesses do,” Taylor says. “There’s a lot of correlation between a weak Canadian dollar and people choosing to shop internationally or online verses shopping local.”
Ian Lee, assistant professor at the Sprott School of Business at Carleton University, says that this presents a challenge for many businesses.
“A weak dollar is going to affect local businesses if they are importers of goods from outside of Canada,” he says, “Some retailers will absorb those increases so they don’t lose their customers.”
Lee says the fear of losing customers to online competitors is also keeping local businesses from increasing their prices.
While the appeal of online shopping may increase with a weak dollar, he says small businesses can offer one thing larger retailers can’t – good service.
“These kinds of businesses have to develop a really strong customer service in order to get customer loyalty,” Lee says. “Small businesses can’t always compete on price, but that doesn’t mean they’re doomed.”
Taylor sees this competitive advantage in action during peak tourist seasons in Ottawa. She says Venus Envy attracts tourists who are more comfortable visiting a sex shop while on vacation.
“People like the privacy of buying these products when they’re away from home and won’t run into people,” Taylor says.
Lee says that by the end of Winterlude, he expects that Ottawa will have seen a five- to 10-per-cent increase in tourists compared to last year’s festival.
“I would attribute that to a cheaper Canadian dollar,” he says, “Americans can have a less expensive holiday in Canada. I think we’re going to see an influx of Americans.”
The good news for Taylor is that Lee says tourists won’t be spending their money in Kanata or Orleans.
Lee says Centretown and Byward Market restaurants and retailers will see the most visitors from out of town. “Tourists stay downtown. There are going to be benefits right here.”