Canadian Retailer - Spring 2014 - 13

Progress on the Pilot Project

The government chose to address two areas ﬁrst: baby clothes
and sports equipment. The rationale is that with tax credits in place
to support young children and
their pursuit of athletic activities,
it makes little sense to offer tax
breaks on the one hand, only to
negate them on the other through
import duties on necessary clothes
and equipment.
From the outset, the federal government has been clear that this
is a pilot project and that further
tariff relief should be forthcoming.
There is, however, a major condition for the next round of reductions: the existence of clear evidence that savings from reduced
import duties are being passed on
to Canadian consumers.
To that end, the government has
contracted highly-regarded Nielsen Research to study the effect
on prices of the elimination of duties on baby clothes and sporting
goods. The study is a detailed one,
across hundreds of SKUs, in some
of Canada's major population centres, with repeat visits to check
pricing in-store and online. RCC
and its members have worked to
support this study, including arranging store visits and providing
input on the many variables that
effect pricing decisions. The study
is expected to conclude in late
summer 2014.
Big Savings So Far

While the Nielsen Research study
will be the deﬁnitive analysis of
the effect of tariff reduction at retail, the savings to consumers are
already emerging. In January and
February, RCC surveyed a number of members in the baby clothing and sporting good areas. This
mid-point analysis found savings
across the full range of goods on
which import duties have been
eliminated. In some cases, the
savings have been even greater
than the amount of duty that was

eliminated, as the changes permitted retailers to re-price at lower
price-points.
On equipment for a junior or senior hockey player, for example, savings were typically in the order of
10 per cent of the ﬁnal retail price,
amounting to around $50 on a set of
hockey gear. Similar savings were
realized on baby clothing, shoes
and outerwear.
Looking to the Future

As noted, RCC is providing
advice to government on the
many variables that can affect
retail pricing, including such major considerations as exchange
rates on the Canadian dollar and
whether or not wholesalers are
passing on savings from the tariff
reductions. RCC is conﬁdent that,
with all the variables properly accounted for, the Nielsen Research
study will show the clear beneﬁt
to Canadian consumers, allowing
the government to proceed to the
next phase of reductions on import duties.
RCC will continue its work to
ensure that all players in the retail
business-manufacturers, importers and wholesalers-join retailers

BN C RES
EAR

+
12.2013
STAFF

For more information concerning
Customs Tariffs, the impact of duties on imported goods and the work
being conducted by Retail Council
of Canada and its members to
reduce and eliminate these tariffs,
contact Karl Littler, Vice-President,
Provincial GR & Strategic Issues,
Retail Council of Canada at 416922-6678 ext. 204, or via email
at klittler@retailcouncil.org. You
can also visit the Advocacy page
on our website at www.retailcouncil.org/advocacy.

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in passing on savings leading to
lower retail prices.
With eyes on the bottom line,
retailers understand that the government lacks the ﬁscal capacity
to provide immediate tariff relief
across the board, given the $4 billion cost of doing so. But neither
will the government want to stand
pat on an issue that has such an
obvious impact on consumers.
The government did the right
thing last year in starting the process of tariff reductions. The proof
is starting to mount, and retailers
look forward to the potential for bigger changes on the Customs Tariff
in Budget 2015 and onward.

Gain valuable consumer
data & insights, including:
Reader proﬁles by book genre
Price point tolerance
Book-buying habits (format, location, etc.)
Browse our full list of consumer research reports
at www.booknetcanada.ca/consumer-studies

Capitalize on extensive consumer research:
» Two years of quarterly surveys
» 1,000 Canadian book buyers per survey
We acknowledge the ﬁnancial support of the Government of Canada through the Canada Book Fund (CBF) for this project.

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Canadian Retailer - Spring 2014

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