Inside This Issue - News
Target hits Canada
April 15th, 2013
TORONTO – About two years after announcing that it would expand into Canada, and about a month after it began holding soft openings for 24 stores in Ontario, Target Corp. officially introduced itself to Canadian consumers with grand opening ceremonies at its outlets here.
Target has brought its usual sense of style to the market: A pre-grand opening event at a store in east-end Toronto featured appearances by "Sex in the City" star Sarah Jessica Parker and "Gossip Girl" star Blake Lively. Also present was Calgary-born actress Elisha Cuthbert of the television show "Happy Endings."
Target opened its first pilot stores in Ontario on March 5, opened another 17 on March 19 and opened four more on March 28. All 24 stores had their official grand openings on April 5, a day after the retailer’s first circulars hit doorsteps around the province of Ontario.
The soft openings were designed to let Target work out some of its operational and supply chain issues before its stores were fully in the spotlight, but its long-anticipated arrival in Canada meant that it began attracting attention, and generating headlines, right away.
Some customers at the first three stores complained about long lines and empty store shelves, for example. The opening of additional stores helped ease some of the inventory issues, but some customers complained that prices at the Target stores in Canada were significantly higher than in the retailer’s U.S. stores.
Target Canada president Tony Fisher addressed the issue at a Canadian Club of Toronto luncheon in mid-March, acknowledging that "there has been a lot of widely publicized discussion around the retail prices not being on parity."
The problem is that costs are higher in Canada, he said, citing transportation costs, distribution costs, wage rates, tax rates and import duties as examples.
The price disparity between Target’s stores in the United States and those in Canada attracted attention because so many of the retailer’s new customers in Canada have already shopped its stores on the other side of the border.
The prices in the new Ontario stores are quite competitive with Target’s Canadian rivals, however. A survey conducted in early March by the Boston-based consulting firm Kantar Retail found that Target’s prices in Canada are just 0.2% higher than Walmart Canada’s on a typical shopping basket full of goods.
Kantar assessed a basket of 29 national brand items from such categories as edible grocery, nonedible grocery, and health and beauty aids. The Walmart and Target stores shopped for the price survey were located nearby one another in the greater Toronto area. According to Kantar, basket contents were predetermined to achieve a diverse mix of categories that would represent the range of purchase options available to shoppers, and only identical SKUs from both retailers were included in the mix.
"The retailers’ baskets were very competitive," said Robin Sherk, director of retail insights at Kantar and a contributor to the study. "We found that the price of Target Canada’s overall basket was within 25 cents of Walmart’s."
The study found that Walmart’s prices were generally lower than Target’s in edible grocery, while Target did better with nonedible grocery and H&BA. More than half the items were priced within 3% of each other, and Target’s 5% Rewards program would have made its basket 4.8% cheaper than Walmart’s.
"Looking ahead, we expect price competition between these two retailers to sharpen as they compete head-on for the same shoppers," Sherk said.
Target plans to debut in Vancouver and Calgary later this spring and to have 124 stores open throughout Canada by year-end.