Target In Canada Poses Fresh Challenge For Existing Retailers

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TARGET IN CANADA
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TORONTO - As Target opens for business in Canada, the discount giant's affordable designer lines and apparel offerings are of noted interest to style-savvy consumers — and present a fresh challenge for existing fashion retailers.

The Minneapolis-based retailer has already announced plans to partner with established Canadian brands like Roots as well as up-and-coming homegrown designers. But it's the popular designer collaborations with top-tier labels that have made waves south of the border that are of particular interest for Canadian fashion followers.

Mary Kim hasn't had a chance to shop at Target. But the Toronto student said she's excited for the Canadian launch, particularly after missing out on chance to buy pieces from the retailer's line with Jason Wu.

The Vancouver-raised Wu — who designed both of Michelle Obama's inaugural gowns — was in Toronto last year for a one-day pop-up shop where pieces from his Target collection were sold.

"It's very appealing to the general public for those who appreciate fashion but can't necessarily afford haute couture," said Kim, 24, who pens posts on style and beauty at fashionmeows.blogspot.ca.

"It's good-quality fashion, but at affordable prices."

Lena Almeida recalled making a special trip to Niagara Falls to try on pieces from Target's designer collaboration with William Rast, a premium denim and fashion brand co-founded by Justin Timberlake.

"I did get a top and a skirt ... and as I shopped the collection, I was very aware that I was paying probably about a fifth (of) what I would pay for his collection on Rodeo Drive," said Almeida, 34, who blogs at www.listentolena.com.

The Mississauga, Ont., blogger and mother of two said she makes a point of including visits to Target on the itinerary for any cross-border trips, and said the limited-edition lines are a big draw.

With a location now set to open a stone's throw from her home, Almeida said she's pretty certain Target will become her "go-to" when it opens — especially if they carry the well-known brands that have become synonymous with the retailer.

"I can't imagine going to the States then because, I mean, let's be honest, for the few dollars that you save, you're spending that in time."

Target Canada spokeswoman Lisa Gibson said Canadians can expect to see designer partnerships along with unique offerings for Canada.

"Designer partnerships in particular we take them on a case by case basis. But the goal is really to bring the same Target experience that people know and love from the U.S," Gibson said.

Daniel Baer, partner and national retail industry leader with Ernst & Young, said the arrival of Target — or any strong competitor — has to be taken in the context of the broader retail scene in Canada. Retail sales are still "quite tough," with December proving to be a much weaker month, he noted.

Both Sears Canada and Montreal-based clothing retailer Reitmans reported a drop in sales during the holiday shopping period.

While Montreal-based clothing retailer Le Chateau saw its online sales grow 92 per cent in the third quarter, overall sales fell 9.5 per cent.

"It's already a difficult environment," Baer said from Montreal. "But you add to that a known brand, a stronger competitor into that environment, it's sure to create more competition, more choice for the consumer, but a more difficult environment for existing retailers in the marketplace right now."

With Target's brand promise to "Expect more. Pay less," Baer said he expects the issue of pricing to be one of concern for existing retailers.

Target's limited-edition Roots Outfitters line will feature fashions for women, men, boys, girls and toddlers, including hoodies, T-shirts and track pants, with prices ranging from $7.99 to $34.99. Brands exclusive to and owned by the retailer — including Liz Lange Maternity, Merona and Mossimo — are also set to feature apparel items for $50 or less apiece.

Rather than trying to match Target's exact approach, Baer said other retailers should be looking at what distinguishes their product from the pack.

"I think the Canadian retailer has to focus on what they do best, and hopefully, it's not competing on price because .... competing on price can be very difficult against a Target, a Walmart, a Costco — any much bigger player regardless of whether they're in fashion, hard goods, grocery or whichever."

Baer said the key question for Canadian retailers at this stage is to determine who their core customer is and who their merchandise will appeal to — and stick to that.

"If you do try and compete with Target, if you do try to align your strategy to theirs or to any other retailer, I think that tends to be a recipe for trouble. These are much bigger players, they have many more resources," he said.

"It's hard to compete against them on their footing. I think you have to look at what is your field of play as a retailer and compete on that surface."

Baer noted that Reitmans, Aldo and Le Chateau have embarked on designer collaborations of their own prior to Target's arrival, and said other retailers could find such partnerships to be of benefit.

"Consumers react when there's a limited time and a limited quantity on a certain product — it makes it more appealing in a certain way to them," he said. "You see that with fast-fashion retailers like Zara and H&M as well. So I think limited-time special collaborations is something that can work very well for retailers."

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