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Exchange rate among range of reasons keeping Canadians from visiting ND

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Kay Derry, owner of Northern Roots Boutique near the CanadInn and Tim Horton's, posts a sign in her window welcoming Canadian shoppers to Grand Forks. photo by Eric Hylden/Forum News Service2 / 2

WINNIPEG -- Winnipegger Sam Hagenlocher remembers shopping trips to the United States when he was younger, but it’s been a long time since he crossed the border.

“I haven’t been back in years,” he said.

Observers of Canadian travel and tourism have traditionally blamed an unfavorable exchange rate for keeping Canadians like Hagenlocher home. Since 2014, the number of noncommercial automobiles entering the U.S. has fallen by 25 percent while the value of the Canadian dollar has hovered around 76 U.S. cents since 2013.

But experts say it seems there’s more keeping Canadians away than just economics.

“It’s a really complicated issue,” said David Flynn, chair of UND’s economics department.

While it’s the exchange rate keeping Manitobans Charlene Burnett and Caroline Ullberg home, annual back-to-school shoppers Darren and Gisele Oleksiuk said they’ve started staying on their side of the border as shopping centers in Manitoba open more American stores. Lynn Hopner of Altona, Man., shops in Canada for the sake of patriotism, and Tammy Murdoch, another Manitoban, refrains from visiting the States because of President Donald Trump.

“Do I think that it will be like this forever? No, but I can’t say when it will change,” said Julie Rygg, director of the Greater Grand Forks Convention and Visitors Bureau. “Right now it's like this. It’s unfortunate, and it does impact us.”

A ‘significant’ loss

Noncommercial vehicle traffic through the Pembina, N.D., port of entry decreased by almost 14 percent from September 2017 to September of this year, continuing a yearslong decline in cross-border traffic.

In 2014, 369,328 cars crossed the border in Pembina, according to U.S. Customs and Border Protection. Last year 277,247 crossed the border, a decrease of nearly 25 percent in three years.  

“A passenger vehicle doesn’t necessarily have just one person in it,” said Barry Wilfahrt, president and CEO of the Greater Grand Forks Chamber of Commerce. “If you look at almost 200,000 less vehicles coming across the border with an average of two people per car? That’s 400,000 less people. It’s significant.”

Hal Gershman, who owns Happy Harry’s Bottle Shops, recalled recently seeing the number of yearly border crossings fall by 20,000 vehicles.

“That was like taking the city of Dickinson out of the market,” he said. “That’s really, really bad.”

More than the dollar

The Oleksiuk family goes school shopping almost every year, said husband and wife Darren and Gisele. While they’ve spent many of those trips in Grand Forks, they’re starting to find more reasons to stay and shop in Canada.

“There’s lots of good deals to be had here,” Darren Oleksiuk said Nov. 16, while looking around the new Outlet Collection shopping center in Winnipeg. “There’s not really a reason to need to go to North Dakota anymore.”

Neil Fishman, general manager at the Outlet Collection, said his site offers nearly 20 “first-to- market stores,” meaning it’s an American brand’s first location there. Some examples at Fishman’s mall include Kate Spade, DSW and Lacoste.

Online shopping is also on the rise in Canada, depriving even more brick-and-mortar locations in the States of shoppers.

Several Outlet Collection shoppers also cited an aversion to President Trump while shopping at the Outlet Collection.

“It’s tough. It's like watching your neighbor’s life fall apart right in front of you,” Hagenlocher said. To him, Trump is “so offensive” it makes sense traffic is down at the U.S. border. He suggested Trump’s comments were hurting sales. At the Pembina port of entry, from 2016 to 2017 there was a 4.3 percent decrease in crossings.

Canadians took these sentiments to social media with #BoycottUSA, following Trump’s comments at the G7 Summit for North American leaders in June. Trade officials said after the hashtag began trending they didn’t know how the movement would affect Grand Forks traffic.

Tariffs may also be to blame, UND’s Flynn said, along with uncertainty surrounding a newly negotiated North American trade agreement.

Some Canadians echoed his sentiments.

“With the new NAFTA agreement, we’re not sure how spending our money in the U.S. affects that,” Darren Oleksiuk said.

Money talks

Declining sales tax collections also speak to the lower number of border crossings, experts say.

The retail sector accounts for most of North Dakota’s sales tax collections, said state Tax Commissioner Ryan Rauschenberger. Collections in Grand Forks continue to drop as it has lost major national retailers. From October 2017 to October 2018, the Job Service North Dakota office for Grand Forks reported the metro area has lost 100 retail jobs.

“Grand Forks has seen some of the largest percentage declines year over year in the state,” Rauschenberger said of tax collections.

This affects the economy in Grand Forks because there are lower sales tax collections for the city.

City Finance Director Maureen Storstad reported collections from January to November 2018 were down about 1.9 percent from collections last year, excluding an added sales tax the city began implementing in April.

Rauschenberger said sales tax refunds for Canadian shoppers also indicate an impact from low Canadian traffic.

His office receives applications from Canadians wishing to get a refund on what they pay on sales tax while in North Dakota. Calling it a “low year,” Rauschenberger said the state received 10,800 applications in 2017, totaling over $1 million refunds last year.

Through November of this year his office has only seen $870,000 in refunds from 880 requests, and expects the number at the end of the year will still be lower than 2017.

One thing that remains unclear is how long this decline will last.

Gershman of Happy Harry’s in Grand Forks, who called Canadian traffic an “important part” of his business, said the store isn’t backing off from its normal efforts to attract business.

“We’re not really making any significant changes to our marketing plan,” he said.  “Our margins are so low right now, we can’t afford to offer anything beyond the sale prices we have right now.”

Looking ahead

Tourism agencies like the Grand Forks CVB and the state tourism division continue to study Canadian traffic and tourist habits.

“We see their activities are shifting,” North Dakota Tourism Director Sara Otte Coleman said. “They still like to shop, but it might be a more of a local, or more of a unique shopping experience they want, mixed with other things.”

In the last couple of years, Otte Coleman said she noticed Canadians interacting more with “broader advertising.”  

“So, where shopping might not be as much of a motivator based on the current environment, they’re interacting with everything from entertainment and outdoor activities to festivals and events,” she said.

In an effort to highlight Grand Forks’ diversity in local business, the CVB started the “Grand in Grand Forks” campaign a couple of years ago. Staff sent several shops in town signs saying “Canadians put the Grand in our Forks.” Director Rygg said the CVB wanted to show Manitobans how much the region appreciates their business.

Blue Weber, executive director of the Downtown Development Association, said he thinks Canadian traffic downtown has remained relatively stable, while traffic remains down on the south end of town.

“In fact at one of our Art and Wine Walks over the summer, 30 percent of people there were Canadians,” Weber said.

Otte Coleman has also found a reason for optimism. Her office’s numbers regarding online campaign interaction have actually risen despite the state’s lower border crossings.

North Dakota Tourism’s website traffic from Manitoba was up 71.93 percent from 2017, Otte Coleman said, and traffic from Saskatchewan was up 94.37 percent. In a list of top 10 origin markets from this year, Winnipeg was third and Regina, Sask., was ninth.

Using data from Arrivalist, a company dedicated to tracking offline responses to online advertising, North Dakota Tourism verified 1,229 arrivals from Canada per 30 percent of Canadian devices that accessed digital advertising and website content from North Dakota Tourism.

Studying clicks and funding more direct marketing is the one thing Otte Coleman said her office can do in the face of political and economic factors.

“We try to figure how we can be the most effective with our messaging and our marketing. And one way to do that is to really understand consumer behavior and interests and likes.”

As Otte Coleman looks forward to a brighter future online, business owners like Gershman say they may have to adjust to a “new normal” for border crossings.

“If I could predict when it’s going to turn around or what it’s going to be, a lot of people would be paying me to tell them,” Gershman said.

Until then, his business and others throughout the Grand Forks area will feel the sting of the lost traffic.

“I don’t think we’re the Lone Rangers, right?” Gershman said.  “Everyone’s kind of feeling it.”

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