Target Set To Alter Canadian Retail Landscape


First Posted: 02/23/2012 4:11 am Updated: 02/24/2012 5:26 am


The buzz surrounding Target Corporation's move into Canada could quickly turn into a backlash if the U.S. retailing giant can’t deliver quality goods at prices similar to what it charges south of the border, experts say.


On Thursday, a year ahead of the official launch of its 135 stores across Canada, Target opened a temporary store on King Street West in Toronto to give consumers a taste of what to expect. The pop-up store featured clothing by Vancouver designer Jason Wu, with 100 per cent of sales going to United Way Toronto.


Thursday's soft launch was greeted with a long line of eager customers and much fanfare, a reaction that wouldn't surprise Detlev Zwick, a professor of marketing at York University. Many Canadians know the brand from U.S. shopping trips, and many expat Americans long for it. Target also fills a gap in this country, Zwick says.


“It’s going to be greeted with a lot of enthusiasm, especially by middle-class consumers in urban areas, where there is a gap in the retail landscape between the high end, with Harry Rosen and Holt Renfrew, and the low end, with Zellers and Wal-Mart,” he said.


“The prices are excellent and the quality of the stuff you can buy in Target would cost 30 to 40 per cent more in other stores, if you can even find those brands.”


Zwick moved to Canada 10 years ago from the U.S., where the Minneapolis-based Target has 1,763 stores. The lack of Target stores in Canada has been a constant lament among fellow expats, he said.


However, Target will run up against the same challenge as other U.S. retailers that have made a foray north – significantly higher operating costs, which are typically passed on to consumers through higher prices.


Higher taxes and retail labour costs that are about 20 per cent more in Canada are among the factors that affect pricing here, along with a smaller population, higher transportation costs and economies of scale that allow U.S. retailers to reduce costs.


The price differential issue resurfaced last month after popular U.S. fashion retailer J.Crew opened its first Canadian store and first Canadian website, charging more here than in the U.S. and causing an uproar among consumers. Last November, Bank of Canada governor Mark Carney told a Senate committee that Canadians pay on average 11 to 20 per cent more than Americans for the same goods.


It’s not a question of whether Target will charge more in Canada but of how much more it will charge.


“Target will be an interesting case study for what they do in terms of their pricing strategy – how far they go before they piss off consumers,” Zwick said. “Consumers can quickly turn against them if they feel they’re being gouged. Canadian nationalist sentiment might be flared up with feelings of U.S. retailers coming to fleece us.”


But Zwick suggests Target might still get away with charging prices about 10 per cent higher in Canada than in the U.S., as consumers factor in savings from not having to drive across the border to shop.


“If Target is willing to replicate the value proposition they offer in the U.S., it will be a very successful move for them and for consumers, who will flock to them.”


For retailers, Target’s move into Canada will ratchet up the pressure in an already competitive retail marketplace, said Kenric Tyghe, a consumer and retail analyst with Raymond James Capital in Toronto.


"It marks the beginning of the next wave of U.S. entrants to the mass Canadian retailing landscape. It's the single largest change to the retail environment since the entry of Wal-Mart."


Because the majority of Target's Canadian stores will be based in Ontario initially, its main competitors will be Wal-Mart, Shoppers Drug Mart, Loblaws and the Bay, Tyghe said.


Consumers stand to gain from potential price wars.


"Target can afford to compete on price to take market share because they are starting from zero, where the Canadian guys have to defend their market share."


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The buzz surrounding Target Corporation's move into Canada could quickly turn into a backlash if the U.S. retailing giant can’t deliver quality goods at prices similar to what it charge...
The buzz surrounding Target Corporation's move into Canada could quickly turn into a backlash if the U.S. retailing giant can’t deliver quality goods at prices similar to what it charge...
The buzz surrounding Target Corporation's move into Canada could quickly turn into a backlash if the U.S. retailing giant can’t deliver quality goods at prices similar to what it charge...
The buzz surrounding Target Corporation's move into Canada could quickly turn into a backlash if the U.S. retailing giant can’t deliver quality goods at prices similar to what it charge...
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HUFFPOST SUPER USER
nanaofmysky
Adopt from a rescue or shelter.
07:52 PM on 02/28/2012
Even if the prices are a little more than in the States so what. Think about the cost of gas ( last I looked it was $1.26) add that to duty coming back,meals etc. The cost should come out near the same. These stores coming here should result in more jobs. Even with putting so many out from Zellers. I have been told they will not hire anyone from Zellers.
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12:36 PM on 02/24/2012
"Higher taxes and retail labour costs that are about 20 per cent more in Canada are among the factors that affect pricing here, along with a smaller population, higher transportation costs and economies of scale that allow U.S. retailers to reduce costs"...

...just read what you wrote man!

No Frills sells Tasters Choice Coffee for $12 and Loblaws for $17 why is there freaking $5 difference?...what higher costs you are talking about?

Target in Aventura, Fl has been next to Whole Foods for years without food department. Since they opened food section 2 years ago, Whole Foods slashed their prices on similar or exact products so they could compete.

The problem in Canada is lame mentality and different business enviroment plus nonsensical regulations and custom business traditions. All in all equals to no free market and no business democracy.

No PhD required here, OK
09:57 AM on 02/24/2012
Yes! As the songwriter John Prine once wrote:
"It's all filled with ticky-tacky
and all designed to make us poor...:
09:19 AM on 02/24/2012
It's all made in china, well then it's all crap. Stop buying chinese crap. Just don't do it!!!!
09:05 AM on 02/24/2012
Won't see me there, another US company trying to steal money from Canadians. I try to buy Canadian goods whenever possilble.
05:44 PM on 02/24/2012
I agree with you and never buy chinese it is jst crap
10:54 PM on 02/23/2012
screw target.............woolco and towers 4life
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Blodo
Time to build a better world
01:18 PM on 02/23/2012
Oh...Who cares? Another retail store. Meanwhile, the fundamental problems of Canada's economy persist: companies refusing to spend adequately on R&D or too gutless to take risks on innovation; a national mindset and government policies that are far to focused on resource extraction; lack of harmonization of labour laws between provinces; household debt that is unsustainable; continued federal deficits; and a housing market that is set to crash.

But hey, I'm sure that handbag will look great with those socks...and such a bargain!
12:33 PM on 02/23/2012
In this dog-eat-dog world, any money that stays in my pocket is better than in someone else's. I will shop wherever I get the best price and I will not pay for parking for the priviledge to do so. I live in the suburbs of Montreal, I shop there as well. The financial security of my family is more important than my support for local business. If Target comes in and gives me a place to buy the things I like at a better price than their competition, they will get my money. And if I can avoid being taxed by the city for parking my car to spend money downtown, then so be it. For those that are accusing box stores of not being green, if all Canadians stopped using fossil fuels tomorrow, it wouldn't even be noticed on the world stage.
12:50 PM on 02/23/2012
That's my point as well. It's just being realistic...instead of that "i'm better than that" mentality.
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01:02 PM on 02/23/2012
And the assimilation is complete. God bless Camerica.
03:20 PM on 02/23/2012
Call it what you want. I can't feed my family a Canadian flag for supper. I don't consider letting myself get ripped off by Canadian companies to be a something that makes me Canadian.
11:48 AM on 02/23/2012
I don't understand many of the posters here. Why is there a knee-jerk rejection reaction to anything "new". What's wrong with retail competition? Don't Canadians think they deserve it? Are they sickened by visits to the U.S. where suburban areas are dotted with box stores offering discounts on everything from toaters to tires? Granted these concrete crates are taking natural land and filling them with cars, instead of trees. But we are a land of consumers. We NEED things go get by in life. Again doesn't selection and price mean anything to you folks? Or are accustomed to paying higher prices and getting by with less? Or do Canadians feel that they're above "this sort of thing". It's like saying, "oh yes, we love TV, we watch the CBC"... while not thinking that they need an alternative point of view, or a diversity of entertainment.

I'm just trying to understand the whole picture.
12:09 PM on 02/23/2012
I'm Canadian.

I watch hundreds of north-american TV channels ...not just CBC (and that, rarely!)

I know that there's a plethora of retailers with prices between Holt's and Zellers...(What IS that, anyway?..Playing on Americans' never-ending ignorance about this country?)

We pay our workers considerably more...hence part of the increased cost.

Our taxes are higher... yes, those taxes pay MOST of our citizens' health care costs.

If products are NOT made in North America...there's duty included when we buy from the US... that's a bad idea?

Grow up everyone and get an grip...stop with the entitlement attitude.

We will STILL get those interesting Target products, even if we have to pay more for them than if we flew/drove to a US city to buy them from a poorly paid and non-health insured employee.
12:23 PM on 02/23/2012
Well said!
12:27 PM on 02/23/2012
I understand about higher taxes, higher wages and national healthcare. And I don't have an entitlement attitude. Okay... so it's more of a "social" issue allowing such stores. If a person is lacking certain skills, and finding it difficult securing employment, or if they need a part-time job, that working at a Target store is somehow not benefitting them? Isn't poor pay better than no pay? Sometimes life throws us unfair and unjust curves. Or is that where the entitlement society comes in, that they're better receiving everything from taxes that I pay, as opposed to have some self respect, and working, even if it's not the most glamorous or the best paid?
01:14 PM on 02/23/2012
Perhaps its beyond you?
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11:42 AM on 02/23/2012
Its just another store... I don't understand why that's exciting people. Maybe its because my family has never went across the border for clothing, but I don't get it.
11:35 AM on 02/23/2012
Target is anti-union and has been union-busting in Canada - I have them in the same category as Walmart - businesses that I will not patronize as they do not pay a living wage and all profits flow to rich 1% families in the US.
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HUFFPOST SUPER USER
SayBlade
This micro bio intentionally left blank.
04:12 PM on 02/23/2012
Worst is Walmart which is among the largest welfare recipients in the US.
07:42 PM on 02/23/2012
But would you pay X% MORE at a union shop if that same money would have stayed in your pocket, had you bought the same at Target?

Those who work at Walmart - ironically Walmart is the only place they can afford to buy from. Food for thought.

And if you're continuing down this "1%" brigade of yours, you might as well live on the outskirts, grow your own food and don't buy ANYTHING. You CAN live on extremely simple means. And that means not buying any Gilette razors(that's a consumer product which enriches their 1% too, after all) and just growing our your beard, and washing your clothes in the river stream.

If you have no money to give, then that's no money to the "1%" right?
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HUFFPOST SUPER USER
cameron d
Good Guys Win
11:06 AM on 02/23/2012
I live on Roncesvalles Ave in Toronto, right by both Queen W. and Dundas W. I'll never need to go to a Target store ever. Take the big box stores to the 'Burbs and leave them there. The local, independent, stores have retail covered here.
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HUFFPOST SUPER USER
SayBlade
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04:38 PM on 02/23/2012
I prefer to buy from local shops and co-ops if I can. I get far better customer service and product information from neighbourhood Home Hardware store staff than I could get in larger department stores. There used to be a retailer in Eglinton Square in Scarborough that sold Canadian made clothing that I liked. Bought a pin striped suit there that got me some good jobs. Found a local garage that delivers what it promises in service and price for car maintenance. I strongly dislike the large grocery chains and purchase food cheaper at the local green grocer or "ethnic" grocery (and in my former meat eating days at the butcher shop). Bought appliances at a local appliance store which provided delivery and installation (where applicable) as well as reinstallation when I moved. I do get the occasional bargain at one of the local thrift stores whose proceeds in part or in whole go to legitimate charities.
10:51 AM on 02/23/2012
Zwick moved to Canada 10 years ago from the U.S., where the Minneapolis-based Target has 1,763 stores. The lack of Target stores in Canada has been a constant lament among fellow expats, he said.

REALLY? You miss Target? This store is crap. I think we should be questioning the "tastes" of americans we're letting into this country. Au revoir Zwickie.
11:13 AM on 02/23/2012
yeah, it reminds me of a travel article i read about the Bahamas once

an american complained that he had to look long and hard to find a Burger King

duh.....
11:26 AM on 02/23/2012
Have you ever shopped at a Target?? Or ANY discount retailer before? Target is better than Woolworth or Zellers.... and a cut above Wal-Mart. Don't knock what you haven't tried, or feel the need to be "protective" of big US retailers entering Canada.
11:36 AM on 02/23/2012
Actually, I live in Toronto and NYC. Don't assume I'm not aware. I'm not protective. Target is CRAP. Now if you were talking NM or Saks, that would be different.... but apparently you're a target shopper... enough said.
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11:47 AM on 02/23/2012
Really? Are you a shareholder?

Better Means what? 10 cents less for Kraft Dinner. The last thing this country needs is another box store with horrible civic planning that promotes driving, lack of a decent living wage for employees and shopping fanatics who think 10% off is economic salvation.
10:47 AM on 02/23/2012
Can you imagine those unfortunate rural Canadians that will not be able to experience Target...

I imagine they are already calling their shrinks for a session....Totally sick society
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HUFFPOST SUPER USER
MissingTheExpos
Most geniuses are conceited...I'm the exception.
10:40 AM on 02/23/2012
Every time I've gone to Target in the USA I have found what I need and at really good prices without the lower end merchandise that is all over WalMart. That said, I doubt Target Canada will offer the same 'deals' found at US outlets. It never happens that way. Prices in Canada always have a huge mark up followed by some cock and bull story about shipping or levies or duties. Since most of this crap, er, merchandise comes from China, what's the difference? Surely they can't import to the USA then export to Canada? Or is that just a stupid question?