Target ready to invade Canada
- Article by: WALKER MOSKOP and STEVE ALEXANDER
- Star Tribune staff writers
- July 12, 2012 - 8:58 PM
Target Corp. said Thursday that it's on track to open at least 125 Canadian stores in a rapid expansion taking less than two years.
The retailer has called the coast-to-coast northern expansion crucial to its goal of reaching $100 billion in sales in the next seven years, up from $69.9 billion in fiscal year 2012.
The first 24 stores will open next March and April, with more openings throughout the year, the company said. Additional stores, with locations to be announced later, will follow in 2014, Target said.
Target spokeswoman Lisa Gibson said the retailer will invest $3.5 billion in Canada, where it aims to open 200 stores within 10 years.
"They're really doubling down in the importance of this market," said Dave Brennan, co-director of the Institute for Retailing Excellence at the University of St. Thomas.
Target needs to carve out long-term opportunities for growth, Brennan said, and the Canadian market is a great testing ground for the retailer's global expansion strategy.
Most of Canada's population and its major urban centers are concentrated within 100 miles of the U.S. border, Brennan said, making logistics much easier than in Mexico, where the population is more dispersed.
And while there are some differences in culture and in law -- all labels in Target stores will have to be in English and French -- Brennan expects stores in Canada to be similar to those in the United States.
As part of the deal, however, Target will be required to carry uniquely Canadian cultural products and support Canadian cultural events and organizations, according to the Office of the Minister of Canadian Heritage and Official Languages.
Battle against Wal-Mart
In preparation for Target's arrival, Wal-Mart, which has 333 stores in Canada, is cutting prices and investing in its own expansion efforts. In February, the company announced it would spend $573 million in Canada, adding 42 stores.
Wal-Mart Canada is by far the largest discount retailer in the country, Brennan said, and within a few years, Target will likely be the next-most-dominant chain.
Target previously said that it would convert a large number of existing Zellers retail stores to Target stores in 2013, and on Thursday it added two new locations: Niagara Falls, Ontario, and Laval, Quebec.
The company paid $1.85 billion last year to acquire the leases of 189 Zellers stores, 39 of which it sold to Wal-Mart. Renovating the Zellers locations will allow Target to move more quickly than if it had to build new stores.
Each of the existing retail stores will be closed for six to nine months for more than $10 million worth of renovation, the company said.
Target said each store will employ 150 to 200 people, and that hiring of management personnel has begun. Hourly workers will be hired in late 2012 and early 2013.
Target will open distribution centers in Calgary, Alberta; Cornwall, Ontario, and Milton, Ontario.
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