Surge in Cross Border Shopping Weighs on Retail Sales in BC

June 6, 2013
Jock Finlayson

The additional consumer purchasing power stemming from the stronger Canadian dollar, recent increases in the duty-free exemptions, and the large gap between gas prices in Metro Vancouver and Washington state have all contributed to a recent jump in cross-border shopping.

Article Highlights

We estimate that British Columbians spent between $1.0 and $1.6 billion on short-term cross-border shopping excursions to the US last year. This refers to purchases of goods only and excludes services consumed while in the US.

If longer-term trips are included (more than 48 hours), the figure rises to $2.6 billion.

The stronger dollar, cheaper gas, strained household budgets and a recent increase in duty free exemption amounts have all contributed to a significant increase in border crossings. Over the past few years, same-day trips to the US from the lower mainland region have risen from 2.3 million trips annually to nearly 5.7 million last year.

Due to proximity to the US border, British Columbians are more inclined to shop in the US than residents of most other provinces. In per capita terms, last year BC residents made twice as many same-day trips to the US as Ontarians and 60 times as many as Albertans.

The steep increase in cross-border shopping is having a material impact on retail spending in the province. We estimate that if cross-border shopping had not grown sharply (and had remained at 2009 levels), BC retail sales would have expanded by 3% in 2012 rather than 1.9%.

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