How the low dollar is affecting Toronto businesses
Is the lagging loonie hurting or helping Canadian businesses?
It's been more than a decade since the Canadian dollar was this low. In 2002, it hit a record low of 61.98 cents U.S., but was up in the 90 cent-zone four years later.
That's affecting just about everything we buy and sell.
Here's a cross section of Toronto businesspeople and how the low loonie is affecting them.
'Sticking to the basics'
Anthony Pronesti, co-owner of Urban Fresh Produce in St. Lawrence Market, said he already is seeing the affect in foot traffic around his food stall. People are buying more carefully, "sticking to the basics" as the dollar remains uncertain.
"When customers see the prices being so high and they often ask us, 'Why? What's the deal? How come it's so expensive?'" he said.
He said big-box sellers like Food Basics can afford to sell stock at lower prices because of the overall volume that goes through those stores. And they can lower prices on some items to attract customers. Overall, the price changes are slower to appear on the shelves.
But smaller retailers are much more affected by the markets. "We're at the food terminal every day, buying," said Pronesti. The produce at Urban Fresh much more resembles the real cost of the produce.
For instance, Pronesti remembers when the price of cauliflower rose to about $9 a head. His response was to simply not carry cauliflower.
"No one's going to buy it. We're going to end up throwing it in the garbage," he said.
Pronesti's store is new in the market though. He's only owned it since November. So in his entire experience there, the dollar has been plummeting.
He is optimistic, despite the pressures it puts on his business.
"If this is as tough as it's going to be, then all we have to look forward to is better times," he said.
'Leaner and meaner'
Peter Ranell, the owner of a company called Artimport — importers, wholesalers and distributors of nostalgic and traditional toys and gifts — has been hit hard by the low dollar.
"In the past year and half, the dollar has dropped by 20 to 25 per cent. So our costs have had to go up 20 to 25 per cent," he said.
His business has absorbed some of those costs of currency exchange, but some have been passed onto the retailers he sells to.
"We will have to do that again, too. We have no choice," he said.
That ultimately could mean the public will pay more and slowly, that will affect sales. Compounding the problem is the low dollar will make consumers less likely to buy art.
"I'm an optimist but a realist," said Ranell. "We've been in business since 1965. We've been through ups and downs before but we have a unique line and we'll survive. I just have to get leaner and meaner."
The upside of the low dollar
Not every business is hurt by the dipping loonie.
Adriana Withers, the sales director of sports clothing exporter VC Ultimate, said the yawning difference between the Canadian dollar and the greenback is great for business.
"U.S. pricing hasn't changed," she said. "That means our margins are better."
VC Ultimate is all-Canadian made, meaning the company only switches currencies when it ships products outside the country, and mostly stateside. Its subsidiary in the United States buys from the company in U.S. dollars, at U.S. prices.
So while others are seeing costs go up due to the exchange rate, her company is on the other side of that coin.
More struggle for international charities
Samantha Mahfood is the executive director of Food for the Poor Canada, a charity that provides food to those in need in this country and, among other things, builds schools in Jamaica.
Getting Canadians to part with their money for charity is tough under normal circumstances, but Mahfood said the lagging dollar is making it more expensive to make those dollars they do get stretch.
"We get Canadian money, from Canadians, but our work is paid for U.S. dollars," she said of the schools in the Caribbean island.
Fundraisers must now work much harder to get the money required for the schools.
"It costs US$6,400 to build a house in Jamaica. But we now have raise $9,000 Canadian to meet that cost."