Consumers to Benefit as Majority of Canadian Businesses Have

Consumers to Benefit as Majority of Canadian Businesses Have NO Plans
to Raise Prices in 2013-BMO Report 
- Six in ten business owners plan to charge the same amount next year 
- Prices expected to rise an average of 1.3 per cent in 2013  
- Businesses in Alberta, and those operating in the services,
manufacturing, and construction sectors are the most likely to raise
prices  
- Increasing volume and better use of technology seen as more
effective strategies to increase business value than raising prices 
TORONTO, ONTARIO -- (Marketwire) -- 10/27/12 -- Canadian consumers
should expect price increases to be minimal, as 61 per cent of
Canadian businesses have no plans to raise prices next year according
to a new report from BMO Bank of Montreal.  
The survey found that, for Canadian business owners, raising prices
does not even rank in the top five strategies for business owners
looking to increase the value of their companies. Owners who
participated in the poll ranked increasing volume as the top strategy
they will adopt to boost company value.  
Plans to Charge Customers (2013)  
On average, Canadian businesses plan to charge customers 1.3 per cent
more for products and services in 2013. For those who plan to
increase prices they plan to charge 7 per cent more, while those who
plan to lower prices plan to cut them by an average of 18 per cent on
average. 
Nationally, 29 per cent of Canadian businesses plan to increase
prices in 2013 - down five percentage points from last year.
Intentions vary by province; 70 per cent of businesses in British
Columbia plan on holding the line on prices, while businesses in
Alberta are more likely to increase prices (38 per cent). The survey
also found little difference between large and small businesses with
regard to plans to raise prices (Large: 32 per cent more likely to
increase prices/9 per cent less likely, Small: 29 per cent more
likely to increase prices/4 per cent less likely). 


 
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                   National     ATL      QC      ON   MB/SK      AB      BC 
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The same prices          61%     56%     56%     65%     49%     54%     70%
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Charge less               4%      2%      6%      5%      1%      2%      2%
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Charge more              29%     32%     33%     25%     27%     38%     22%
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By sector 
Companies in the business and financial sectors indicate they are
most likely to keep prices the same (69 per cent), followed by
retailers (67 per cent). In contrast, 34 per cent of those businesses
surveyed in the construction, manufacturing and services sectors say
they are most likely to raise prices next year. 
"Modest economic growth, the high Canadian dollar and the lure of
cross-border deals have convinced many Canadian businesses not to
raise prices," said Sal Guatieri, Senior Economist, BMO Capital
Markets. "Staying competitive by cutting costs and raising
productivity is the name of the game, and will help Canadian
businesses in the long run." 
Mr. Guatieri noted that with a slower economic growth rate for Canada
of 2.2 per cent in 2012, price pressures will be contained. "The
inflation rate will likely fall from 2.9 per cent last year to 1.6
per cent in 2012 and stay below 2 per cent next year, supporting the
spending power of households." 
Most Effective Strategies to Increase Business Value  
The study conducted by Pollara Strategic Insights found that, on
average over the past five years, businesses have seen their value
increase by 19 per cent. While no particular strategy stands out
above all others, raising prices is not seen as one of the top five
most effective strategies. The report also found that at least half
of all businesses surveyed have used each of these top five
strategies: 


 
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                                             Most Effective    Used in Past 
Strategy to Increase Company Value                 Strategy            Year 
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1.   Increase volume                                     17%             64%
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2.   Better use of technology                            14%             74%
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3.   Improve quality of management team                  12%             53%
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4.   Decrease overhead costs                             11%             61%
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5.   Manage/reduce debt                                  10%             50%
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     Increase prices                                      8%             49%
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"In the current business environment, it is important that businesses
look at both sides of the coin. On one side, firms need to look for
opportunities to increase efficiency, reduce costs, and invest in the
technologies and process improvements that will enhance productivity.
On the other side, successful businesses are those that have also
become more resilient, and have actively found ways to diversify
their supply chains, connect with new customers and open new
markets," said Steve Murphy, Senior Vice-President, BMO Commercial
Banking. 
The telephone survey was conducted by Pollara Strategic Insights
between August 13 and September 5, using a sample of 500 Canadian
business owners. Results carry a margin of error of +/-4.4 per cent,
19 times out of 20. 
About BMO Financial Group  
Established in 1817 as Bank of Montreal, BMO Financial Group is a
highly diversified North American financial services organization.
With total assets of $542 billion as at July 31, 2012, and more than
46,000 employees, BMO Financial Group provides a broad range of
retail banking, wealth management and investment banking products and
solutions.
Contacts:
For media inquiries, please contact:
Paul Cunliffe, Toronto
(416) 867-3996
paul.cunliffe@bmo.com 
Valerie Doucet, Montreal
(514) 877-8224
valerie.doucet@bmo.com 
Laurie Grant, Vancouver
(604) 665-7596
laurie.grant@bmo.com
Internet: www.bmo.com
Twitter: @BMOmedia
 
 
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