Is Black Friday worth the trip?
Report by Adrian Brijbassi
Vacay.ca Managing Editor
TORONTO, ONTARIO — 33.3%. That’s the number Vacay.ca thinks you should keep in mind when looking at shopping deals on both sides of the border in the next couple of days.
Black Friday is supposed to be about saving serious cash. Canadians, though, may be coming up short this year when they venture south. Even though cross-border shoppers who spend one night in the United States can now return home with up to $200 of goods without paying a duty, the best option for saving cash may be staying in Canada.
When you consider that Canadian retailers are offering steep discounts in 2012, the lure may actually be to a local shopping mall, not the outlet on the other side of the border. But how do you decide whether you’ll be saving cash by staying home or going bargain-hunting in America?
The answer is one-third. Meaning, if Canadian retailers offer one-third off the same merchandise you plan on trekking hundreds of kilometres to purchase, then it’s best to stay home.
Here’s our explanation.
Vacay.ca has studied the cost of travel for Canadians, as well as compared advertised Black Friday sale prices in the United States with regular prices in Canada for the same merchandise during the past month. What we have determined is most Canadians seeking to maximize their purchasing power in the United States can expect to spend more than $350 on travel expenses per couple during Black Friday weekend. Combine that cost with non-refundable taxes in several states and Black Friday can easily leave Canadians in the red.
How to Know If You’ll Save Money on Black Friday
The following shows an example of one product that on the surface seems like a bargain worth a long drive to pick up, even if it means enduring painful border waits and shopping-mall aggravation.
Best Buy’s Black Friday sale flyers list the Toshiba 50-inch 1080p LED HDTV for just $399, a whopping $400 savings off the list price of $799.99.
The Canadian Best Buy stores are selling the same television for $699 until Thursday, November 22. (Presumably, that television and all other items at Best Buy outlets in Canada will be on sale come Black Friday, when Canadian retailers promise to entice shoppers to stay on this side of the border. But we have not yet seen the advertising material from Best Buy’s Canadian franchises.)
Given the cheap Black Friday discount in the US, a Canadian couple might think it’s worth the price to head across the border for that big-screen TV. That’s where the other expenses start to rack up.
Here’s a breakdown of what Vacay.ca has calculated. We opted to use the example of a couple from Toronto travelling to Buffalo, New York, where the combined state and county sales taxes equal 8.75 per cent. In our example, the couple is driving a 2012 Honda Civic 1.8-litre hatchback, the current biggest-selling automobile in Canada.
1. Maximizing what you can spend.
If the couple stays between two and seven nights in the US, they each can purchase $800 worth of goods without being taxed by the Canadian government. The temptation is to max out on the amount of money they can spend on their shopping spree. So, in our exercise, they choose to spend two nights in Buffalo and they each purchase two of the 50-inch TVs at $399 each.
2. Doing the math if you travel on Black Friday.
At $399 each, the TVs will come in at $1,735.65 total after New York State and Erie County taxes are added in.
3. Determining the travel expenses.
- Gas: $20.45 round-trip, based on a cost of $1.22 per litre and a total travelling distance of 318 kilometres.
- Hotel: $228.47 for a two-night stay, including taxes. That total was determined on a Hotwire.com opaque search that returned Black Friday weekend rates for three-star hotels (Radisson, Holiday Inn, Best Western) in downtown Buffalo. You can get cheaper rates, but Vacay.ca highly recommends staying at three-star or higher accommodations in most American cities.
- Food: $100, a frugal amount for two people for two days.
- Tolls: $3, the charge at the Peace Bridge crossing when entering Canada.
- Tips: $20.
Total travel expenses: $371.92
4. Calculating your total costs.
$1,735.65 (the four TVs) + $371.92 (the travel expenses) = $2,107.84
5. Knowing your costs if you shopped in Canada.
Those same four TVs if purchased at the Best Buy in Canada would run $789.87 each ($699 sales price + $90.87 when you add in the 13% harmonized sales tax, or HST). The total of the four TVs if purchased in Canada would be $3,159.48.
Even with travel expenses added in, the couple from Toronto would have saved $1,051.64 by travelling to the US to shop on Black Friday. But … what if those TVs went on sale in Canada?
6. The 33.3% off trick.
If Best Buy Canada were to put those same television sets for sale at one-third off on Black Friday, then the sale price would be $466.23. Add in the HST charge and the price per unit rises to $526.84. Multiply by four and the total cost is … $2,107.37.
A savings of 47 cents from the total cost of making the same purchases in the US after the travel expenses are added in.
7. Knowing the intangibles.
Not all examples are so tidy for the 33.3% formula, of course. There are lots of other things to consider, too. Most importantly, where will you be shopping in the US? If you’re a Manitoban heading across the border in North Dakota, you are eligible to receive your taxes back when you purchase more than $25 worth of goods.
Also, Vacay.ca didn’t take into account currency differences, choosing to treat the US and Canadian dollars at par. Nor was there a measure for the convenience of shopping near home versus the aggravation of waiting potentially for hours at a border crossing. And once you cross the border, there are massive line-ups for parking, checking out and getting a meal at the shopping mall food court. What is the cost of that hassle? Each of us has to decide that for ourselves.
8. Some items will always be cheaper in the US.
Few goods are sold for the same price in Canada and the US, although since the Canadian dollar reached par in 2007 price equality has very slowly been achieved for some products. For Canadians, shopping in the States means receiving a discount every day of the year. The difference on Black Friday 2012 is Canadian retailers are also marking down their prices drastically, so if a shirt you like at Marshall’s in Toronto sells for $50, it’s probably going to cost in the neighbourhood of $45 (10% less) at a Marshall’s store in the US. On Black Friday, Marshall’s on both sides of the border will have deep discounts, especially on clothing and shoes. At 33.3% off, the shirt in Toronto will cost $33.35. If that’s the case, the Marshall’s in Buffalo will need to mark down its $45 shirt by 75% (down to $11.25) to make the trip a savings, because the Toronto couple still has to add in the $20.45 for gas.
However, if that couple were to buy 142 of those shirts at $11.25 over a two-day stay, they would spend $1,597.50, effectively reaching their $1,600 limit of duty-free goods. To purchase 142 shirts in Toronto for $33.35 would run $4,735.70 (before taxes). Even if you added in the $371.92 in travel costs, the couple would save $2,766.28 by travelling to the States on Black Friday. To be competitive, the Canadian retailer would have to charge roughly 33.3% more than its US counterpart’s lowest ticketed price. In this case, if Marshall’s in Canada discounted the $50 shirt down to $14.95, the Toronto couple could buy 142 units for a cost of $2,122.90, only slightly more expensive than shopping in the US for the same item.
9. Make Black Friday travel work for you.
The best way to guarantee your Black Friday travels are worth it is to make the trip about more than just shopping. Turn the weekend into a getaway. If you do go to Buffalo, make sure you check out the sensational Albright-Knox Art Gallery and the reconstructed Darwin Martin House, a Frank Lloyd Wright masterpiece. If you’re on the west coast and venturing into Washington State, make a reservation at the Willows Inn on tiny Lummi Island. It’s an extraordinary restaurant whose chef, Blaine Wetzel, has been praised by Noma‘s Rene Redzepi, with whom he apprenticed.
Black Friday, Cyber Monday … Hot Chocolate Tuesday
Keeping in the holiday spirit, for the second winter in a row Vacay.ca’s charity initiative, “Hot Chocolate Tuesdays,” is encouraging Canadians to come together to help the homeless in our communities. Although lending a hand to those in need should be something we do every day, the reality is it isn’t easy for all of us to give time or money. What we hope you will do is join us each Tuesday in giving something warm to a member of your neighbourhood or city who is on the streets or staying in a shelter. That gift may be a hot chocolate, a warm meal, a blanket or gloves, or even just a kind word if that’s all you can afford.
Once the crazy shopping weekend is over, maybe we can remember other aspects of the holiday season this coming Tuesday.
If you have a story of homelessness in your community or an idea of what more we can be doing to help those in need, let us know about it. Email firstname.lastname@example.org with your stories, ideas, photos, videos and successes.