Target learns a second language as it expands to Quebec

MASCOUCHE, QUEBEC

In the Wal-Mart store just half an hour north of Montreal, meat is "viande," the bakery is "boulangerie," and the pharmacist is a "pharmacien."

If you don't already know this, don't bother to look for a helpful sign, or ask the employees or customers. French is the law of the land here, literally.

"Is that English I hear?" Robert Hadad, an American shopper who lives in nearby St. Calixte, asked a visitor. "You don't hear a lot of English here."

This month, Target Corp. will officially open its stores in Canada, its first reach beyond the United States. But if the Minneapolis-based retailer wants to truly master the art of operating in a foreign country, the province of Quebec offers the best chance to do so. Unlike the rest of Canada, French trumps English in Quebec, a reflection of the province's deep attachment to its Quebecois culture and history.

That poses a tricky dilemma for Target as it seeks to do business in this country within a country. Not only must it adhere to the strict language laws that require most everything to be French first, but the company must also navigate a populace suspicious of English-speaking foreigners.

"I don't know how you reconcile the two," said Bernie Marcotte, senior managing director of real estate firm Cushman & Wakefield's office in Montreal. "If it was a choice between buying American and buying Quebecois, they would buy Quebecois. If it was a choice between buying American and buying Canadian, let the best product win."

"We did a lot of studying on Quebec because it is absolutely unique," said Target Canada president Tony Fisher. "They are a very proud culture."

That might be an understatement. The province's identity crisis dates back to the 18th century when Great Britain defeated France in the Seven Years War and took control of Canada, including French-speaking Quebec.

Over the past 200 years or so, the province has wrestled with the idea of independence, both through violence and the ballot box. Today, French pride still holds sway over the province. Walk past the French street signs and the European style cafes and boutiques along St. Laurent Boulevard and the city could be mistaken for Paris or Brussels.

"The city is the Europe of North America," Marcotte said. "There is a real sense of history here."

Nevertheless, Quebec presents a significant opportunity to American retailers such as Target, analysts say.

Target officials think their stores also will translate well in Quebec even though local residents are less familiar with the retailer.

"I'm super excited," said John Morioka, senior vice president of merchandising for Target Canada. "I think our brand does hit on what's important to Quebec."

One of those things is fashion. The Quebecois, especially in the larger cities, are quite open to fusing European styles with American trends, residents say. "As a French Canadian and Quebecois, I can say there is a real U.S. vibe here — fashion, music, culture — a look and feel that's easily adoptable," Marcotte said.

Aside from Target's trademark fashion partnerships with prominent designers like Kate Young and Jason Wu, the retailer plans to offer collections from local talent. The retailer recently teamed with Groupe Sensation Mode and Fondation de la mode de Montréal to create the Target Emerging Designer Award. Melissa Nepton, the first recipient of the award, will create a clothing line that will be sold only in Target's stores in Quebec.

Target executives say they are also concentrating on basket sizes and food. In the U.S., Target offers incentives like 5 percent off total purchases for REDcard users as a way to encourage shoppers to buy as much as possible during one trip. Quebec, though, has smaller households, including renters and single parents, who don't need to purchase as much stuff, Stephens said.

Morokia also said Target will need to carefully select its foods, though he didn't offer specifics.

"We have to ensure we offer food that resonates with the Quebecois," Morokia said. "It is a foodie culture. We're still focusing on those nuances."

Wal-Mart, the world's largest retailer, already enjoys a significant head start. Judging by the early afternoon crowds at the Mascouche store, local shoppers have embraced the retail giant even though Wal-Mart took the more difficult approach of building big-box stores in the heart of francophone suburbs.

Part of the reason is Wal-Mart's trademark reputation for low prices, which plays well to the Quebecois. A survey conducted by marketing research firm Colloquy concluded price, not quality or customer service, was the main factor in driving loyalty among shoppers in Quebec.

"With the sales tax, everything is more expensive here," said Haddad, the American shopper. For a retailer to win in Quebec, "the item has to be cheap."

Another local preference is pharmacies. Unlike the United States, where people regularly get their medication at large chains like CVS and Walgreens, the Quebecois trust mostly local pharmacists like Andree Picard, who runs the Mascouche Wal-Mart pharmacy.

Wal-Mart's efforts have paid off. Quebec residents rank Wal-Mart as one of their top shopping destinations, according to the Colloquy report.

"At the end of the day, any retailer can enter as long as they understand Quebec consumer," said Manu Sarna, the Toronto-based general manager of Aeroplan, which designs loyalty programs. "They just have to try a little harder to make it more appealing to Quebec."

But for all of Quebec's tantalizing possibilities, retailers still need to be on their guard given the nature of local politics. The Quebecois may embrace American products but they certainly dislike American control, analysts say.

For example, Rona, a struggling home improvement chain in Quebec, spurned a takeover bid by Lowe's, a move that played well in political circles but was deemed disastrous by financial analysts.

Beyond business, Quebec's language and culture battles still loom large.

Last fall, voters put the Parti Quebecois party, led by Pauline Marois, back into power. As premier of Quebec, Marois has sought revisions to Bill 101 that would further tighten the province's language laws. Under the law, people already must speak French in government offices, courts, schools, and business. The government also requires public signs, restaurant menus and software to be written in French.

In November, major retailers, including Best Buy, Wal-Mart and Costco, filed a lawsuit seeking to block the government's insistence that all store names contains some French, either through a generic French name or a slogan that explains what they are selling. The lawsuit is still pending. Some company names, like Wal-Mart and Starbucks, lack a clean French equivalent.

Target officials say they are very mindful of the language debate.

"We had to think about that quite a bit," Morokia said. He declined to specifically say how Target will meet the new requirements if validated by the courts.

Thomas Lee • 612-673-4113