BUSINESS

'Target Effect': Cross-Border Shopping Declining Due To Retailer, Observers Say

06/20/2013 03:34 EDT | Updated 06/28/2013 01:23 EDT
CP

Target’s entry into the Canadian retail market seems to be having an effect on the country’s long-running cross-border shopping habit, observers say.

Data from StatsCan released this week showed that same-day car trips to the U.S. fell 4.7 per cent in April, following a 1.3-per-cent decline in March -- a total six-per-cent slide.

Target’s first Canadian stores opened on March 5, at the start of the slide in car trips. The number of car trips had largely increased in the months before that, a fact some attributed to the federal government’s loosening of cross-border shopping rules.

The Target factor is there and I think it is just the beginning,” CIBC economist Benjamin Tal said, as quoted at Yahoo! Canada Finance.

It’s not the first time someone has noticed Target having an impact on the nature of Canada’s economy. The OECD last month suggested that Target’s arrival was helping to keep inflation low in Canada, because of “heightened” competition among retailers.

However, many observers will likely question how much of an effect Target could be having; after all, as has been reported before, Target Canada’s prices tend to be higher than those in U.S. stores, and the primary reason for cross-border shopping is lower prices.

The president of Target Canada, Tony Fisher, even suggested in March that Canadians keep cross-border shopping (presumably at U.S. Target locations) if they aren’t happy with the chain’s Canadian prices.

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