This is the fifth year in which we’ve devoted almost an entire issue of Hearth & Home to Canada, its economy, and the hearth, patio and barbecue industries north of the border. During the first four years, Canada and its economy seemed both tranquil and stable. After all, it had escaped the agony of the recession and downturn painfully experienced by most in the U.S.
This year, the Canadian economy seems fine throughout the country, with the exception of oil producing areas such as Alberta (in particular), Saskatchewan and Newfoundland.
However, the disparity of the plunging Canadian currency vs. the U.S. dollar (CN$.76 on 9-4-15) has instilled fear in the minds of Canadian dealers of patio furnishings, spas/hot tubs and barbecue products. That fear concerns the high prices they may be forced to ask for those products in the coming year.
There are few manufacturers of those three categories in Canada, meaning that retailers most likely will continue to purchase from U.S. manufacturers, and the currency disparity may push retail prices beyond what consumers are willing to pay.
The situation is far different for retailers of hearth products. Canada is loaded with hearth manufacturers and, in fact, almost all hearth specialty retailers already buy from one or more Canadian manufacturers.
If their U.S. suppliers become too costly, they can easily get through this period by strictly selling Canadian products.
Here’s an illustration of difficulties being faced by our retail friends up north. One retailer mentioned that he buys patio furnishings through a U.S. supplier who sources from China. For orders he places now for product to be sold in 2016, an umbrella that normally retails for $100 would have to be priced at $300 after factoring in the cost of a container, shipping and the manufacturer’s charge.
Will his customers pay such a premium? He’ll find out in the spring.
Christian Hale is Travis Industries’ only factory rep; he covers British Columbia, Alberta and parts of Saskatchewan. We recounted that umbrella tale to Hale.
“I think that’s right on,” he said. “There are some dealerships I’m in that do sell patio furniture or barbecues or hot tubs. Those guys are nervous. As an example, one of my dealers on Vancouver Island told me this week, ‘This is our best-selling hot tub. It has been selling for $10,000, and now it’s $13,000. We don’t know if people are going to pay that additional $3,000.’ That’s the reality of what’s going on right now.”
To help its dealers – and itself – Travis Industries has been buying millions of dollars of Canadian currency. “That has been very successful for us in the two territories where we go dealer-direct – British Columbia and Ontario,” said Hale. Locking in a fixed rate is certainly preferable to gambling that the loonie won’t continue to drop.
We suspect that other manufacturers and distributors are doing the same.