http://www.cbc.ca/consumer/story/2008/10/23/f-cautiousconsumer.html
Summary
As of last week, the Canadian dollar had fallen to $0.79 U.S. dollars, meaning the Canadian dollar is no longer worth as much as it previously was. With Christmas being only 2 months away, the decreasing value of the dollar is of bad timing. On the other hand, many retail stores will not increase their prices for stocks have already been pre-ordered and have a locked price. Not only so, some retailers may even drop their prices even more by the use of discounts due to the lack of consumer confidence. If the Canadian dollar continues to drop, consumers will be able to take advantage of the reduced prices longer, but even if the value of the dollar does climb back up, prices will not immediately increase.
Connection
When prices soar, discounts are often given out to ease the financial difficulties some individuals face. With this chapter focusing on specialized journals, discounts are recorded in the Discounts Earned account (for the customer) and/or the Discounts Allowed account (for the retailer). While most discounts found in clothing stores or local supermarkets just cut back on the price of the item, there are discounts given when payments are made before its due date. Such discounts have terms that must be met before the discount is in affect. An example would be a discount of 1% when the payment is made within 15 days of the invoice.
Reflection
Giving customers the advantage of using discounts is a great idea and it is also a win-win situation. The customer can save money and the retailers can still gain a fair amount of profit at the same time. When the use of discounts is available, fewer individuals will travel over to the United States to shop and as a result, this could provide some cushioning in the economic recession Canada seems to be falling into. Ovetime, I believe the value of our dollar will increase back to a higher amount and prices will increase as well. How much and when, no one knows but hopefully not too much. No one likes to pay a higher price for the same item.
-Betty Chan
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6 comments:
It has got everyone talking...the soaring gasoline prices, the crashing stock markets, the melamine-contaminated milk, the drop in the Canadian dollars, and much more. All these have contributed to the global economic downturn, and have made financial states of communities, regions, and countries left in a recession.
It is a very wise decision for industries to offer cash discounts and other saving deals, because with the low level of confidence in the current consumer's spending haibit, something has to be done to make them feel more comfortable in spending their money during the hard times.
- Christy Leung
At first, when i read the article I didn't get why prices of goods would decrease if the value of the Canadian dollar decreased as well. When i gave it some thought i realized how and why it would decrease. The reason, why is because if the Canadian dollar decreases than people would be hesitant to buy any goods. So, the cleaver plan retailers come up with is to compare the Canadian dollar to the US dollar and come up with a fair price. They might even host a sale once and a while.
Your article really caught my eye; I didn’t realize the Canadian dollar had fallen so much. When I read the first line of the article I had to go check for myself. I should’ve realized this when I bought something online and the invoice came back saying I owed ten dollars more than what I had expected to pay. I’ve never noticed prices dropping in stores due to the decreasing value of our dollar, but since it is; I agree with Christy and John that it is a superb idea giving out discounts, which will most likely lure customers in. Hoping for the best, I also believe that Canadian dollar will make a speedy recovery.
-Anna Z
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