Target Corp. sees great potential in Canada, where in the next 10 years the retailer plans to open 200 new stores and generate sales of $6 billion per year.

Target Corp., Canada, Target Canada, president Tony Fisher, executive vice president and chief marketing officer, Michael Francis, senior vice president of stores, Bryan Berg, Silverthorne, Colo.

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Inside This Issue - News

Target bullish about future north of the border

June 20th, 2011

CHICAGO – Target Corp. sees great potential in Canada, where in the next 10 years the retailer plans to open 200 new stores and generate sales of $6 billion per year.

Up to 150 of those stores will open by the end of 2014, with the first openings scheduled for early 2013, Target Canada president Tony Fisher said.

Fisher and a number of other Target executives held a media day in Chicago recently to brief Canadian journalists on the company’s plans.

Arguing that "success isn’t just applying the same strategy to a different market," executive vice president and chief marketing officer Michael Francis, who has corporate responsibility for Target Canada, said that the retailer’s first step was for the company’s executives to embark on "listening and learning tours" of Canada. The goal was to gain insights about how to tailor the Target brand to the needs of Canadian shoppers. But in the process the team also got some good news about consumer awareness of the Target brand in Canada.

"Through our visits and our own research," Francis said, "we have been pleased to learn that many Canadians already know Target — in fact, nearly 70% of Canadians are familiar with the Target brand. And not only do some know Target, but a few already share the brand love…we are especially grateful to the 11% of Canadians that have shopped our stores in the last year, and the more than 30,000 Canadians who are currently holders of our Target credit card."

Target’s next step in its Canadian expansion has involved choosing the store sites it will take over as part of its $1.85 billion acquisition of up to 202 Zellers Inc. locations in Canada.

On May 26 Target announced its selection of the first 105 store sites it would acquire.

"While our initial site selection is an exciting step in bringing Target stores to Canada, it’s important to understand that it is a real estate transaction," Fisher explained. "Target will acquire the leasehold interests in these select sites currently operated by Zellers; Target is not acquiring the Zellers business, its employees, its supply chain or its technology."

Instead, Target intends to build its own business in Canada. While it does, Target will function as the landlord of the Zellers sites it acquired, and many will continue to operate as Zellers stores until Target is prepared to take them over.

"The Zellers sites vary in age and size, but we expect that most locations will require significant renovation to provide guests in Canada with the Target brand shopping experience," Fisher said, adding that Target expects to spend as much as $10 million per store on renovations.

"Along with finalizing site selection and renovating existing sites for our first store openings in early 2013," Fisher said, "we‘ll spend the next two years developing the appropriate team, systems, processes and supply chain infrastructure Target will need to effectively operate in Canada."

Fisher said Target plans to begin hiring employees for the company’s Canadian stores and headquarters beginning next year.

"At each of our stores in Canada, we expect to hire about 150 to 200 team members," he said. "This is a meaningful increase over the approximately 115 people employed at a typical Zellers store because we expect the average sales of these Canadian Target stores to be substantially higher than those of a typical Zellers store today."

Target will not take a cookie cutter approach as it rolls out in Canada, according to senior vice president of stores Bryan Berg.

"When we open our Canadian stores, we will be thoughtful to ensure that Target’s in-store experience resonates with our guests," he said. "And although we will stay true to our values, we know there may be times when we need to make changes to our traditional store operations so we can best serve our Canadian guests."

Berg said the customization starts with designing stores to reflect and complement the local landscape and community. Target used heavy timber in its Silverthorne, Colo., store to give it a “Rocky Mountain look,” and when the company entered the Hawaii market it opened a store that incorporated lava stone into the facade.

"We also tailor the products we sell based on how our guests live and shop," he said.