UPDATE: Walmart has confirmed it will be dropping prices on some of its items in a bid to be more competitive, The Canadian Press reports. But while analysts see Walmart's moves as being in response to the arrival of Target Canada, Walmart Canada CEO Shelley Broader notes that the retailer's plan to drop prices on a number of items to a dollar "happens to be a nice method of competing against the dollar stores."
The arrival of discount retailer Target in Canada in the spring of 2013 will arguably mark the biggest change to Canada’s retail landscape since Walmart came north of the border in 1994.
Now Walmart, which in the U.S. is seen as being in head-to-head competition with Target, is announcing major expansion plans in Canada. Though the company isn’t mentioning Target by name, market analysts say Walmart is planning for war, and the result may be a wave of price-chopping among the heavyweight retailers.
At its annual international meeting -- held this year in Toronto -- Walmart execs announced major expansion plans, including increasing the number of stores in Canada from 333 to around 380.
The company is also moving more aggressively into grocery retailing. Of its current Canadian locations, 167 are “supercentres” that have grocery aisles; by the end of the year, 210 stores will be selling food, the Globe and Mail reports.
"We are cementing our place as the location for one-stop shopping," Walmart Canada CEO Shelley Broader said, as quoted at the Wall Street Journal. She added that nine out of 10 Canadians shop at Wal-Mart.
Walmart had earlier announced plans to spend $750 million renovating 73 of its Canadian locations ahead of Target's arrival. Other retailers operating in Canada, including Sears and Loblaws, have also been changing plans to respond to Target.
Market observers say it’s no coincidence Walmart’s push to become a one-stop shop is happening at the same time as Target lays the groundwork for its entry into Canada.
"Of all players currently in or shortly entering the Canada market, Target has been competing head to head with Wal-Mart for the longest and has arguably been the most successful at it, and we don't see that changing as we cross into Canada," UBS retail analyst Robert Carroll told the WSJ.
The Minneapolis-based retailer -- which is planning to open as many as 135 stores in Canada starting next spring -- announced last fall it had entered into a partnership with grocery retailer Sobeys to provide food to Target stores. Sobeys will provide Target locations with frozen goods, dairy, and dry goods, including Target’s private label brands.
Target Canada has also entered into a deal that will see Starbucks locations in their stores, mirroring the sorts of agreements Walmart has signed with restaurant chains like McDonald’s.
But more stores and more groceries may not be enough for Walmart to keep Target at bay. Walmart may have to take a page out of its American playbook and start to chop prices, as well as costs, at its Canadian locations, analysts told Reuters.
"Target has the fun factor," Natalie Berg, director of global research at Planet Retail, told the news service. "They will come in and wow Canadian shoppers. Walmart will have no choice but to become even fiercer on price."
“Fun factor” certainly seems to be the image Target is cultivating in Canada. The retailer opened a one-day pop-up store in downtown Toronto in February, featuring fashions by renowned designer Jason Wu.
Check out these pics of Target’s one-day Toronto store.
