Target announced Monday that it will open 33 more stores in Canada next month, bringing the total number of Canadian stores opened this year to 124.
The final store openings for 2013 “mark a major milestone in Target’s history,” said Tony Fisher, president of Target Canada. The retailer typically opens about 20 locations in the United States per year.
“It’s very clearly Target’s largest new store growth ever in a year,” said Amy Koo, an analyst at the Kantar Retail consulting firm in Boston. “And they managed to hit the mark.”
The rapid expansion hasn’t been entirely smooth. The retailer expected the Canadian stores to be profitable in the fourth quarter this year. Now the profitability expectation has been moved to the fourth quarter of 2014.
Analysts say Target underestimated the popularity of apparel, home furnishings and staples. Even though the rollout began in March, empty shelves have continued to embarrass the retailer.
In a visit several weeks ago, Koo continued to notice open shelves in such areas as laundry care. “It has a long window for ordering — several months — so whether it’s appropriately aligned for the holiday is an open question,” Koo said.
Pricing has been another issue: Before the launch in the provinces, many Canadians were accustomed to getting lower prices at Target stores in the States. Seventy-five percent of Canada’s 35 million inhabitants live within 100 miles of the U.S., so crossing the border to shop is a normal ritual for many.
When Target Canada’s prices turned out to be slightly higher than in the United States due to higher costs, Canadians were disappointed, said Brian Yarbrough, a retail analyst with Edward Jones Investments.
“Now they’re doing a better job of getting shoppers to compare prices with the local competitors and mentioning price matching and Redcard discounts,” he said.
The stores are spread throughout Canada’s 10 provinces, with the majority in British Columbia, Ontario and Quebec. Thirty-one of the stores will open Nov. 13 and two stores will open Nov. 22.
It’s no accident that the stores all open before the retailing hoopla surrounding Thanksgiving and Black Friday in the United States, Koo said. Even though Canadians celebrate Thanksgiving in mid-October, they’re familiar with the late-November deals.
“Target doesn’t want shoppers to feel as if they have to cross the border to get them,” she said.
Target plans more Canadian stores, with five to 10 stores slated to open each year for the next several years.