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Don't expect same savings in Canada

By: Paola Loriggio

Wednesday, Mar. 6, 2013 at 8:22 AM | Comments: 0

TORONTO -- The long-awaited arrival of U.S. discount giant Target means Canadians can now get their hands on the famed bull's-eye brand's wares without crossing the border -- though the savings here might not match those down south.

The retail chain has said Canadian customers will likely see a difference in pricing compared to items carried in its U.S. stores, with the company focused on being "competitively priced" with retailers in Canada.

A spokeswoman for Target Canada couldn't say exactly how that will play out on shelves in the newly launched Ontario stores or the dozens more locations the company expects to open in former Zellers stores across the country.

Pricing depends on a number of factors and it's difficult to give case-by-case examples or even narrow it down to categories of products more likely to warrant higher prices, Lisa Gibson said Tuesday.

"In certain cases, the prices will actually be completely on par with U.S. prices and in some cases there might be some differences, but... our overall goal is to make sure we're competitive with the marketplace," she said, adding the company is also bringing in a five per cent reward program from the U.S.

At the Guelph store, a 2.95-litre bottle of Tide laundry detergent was priced at $15.99 Tuesday, compared with US$11.99 on Target's American website. The same product was listed for $15.99 on the Canadian Tire website.

A bottle of Aveeno moisturizer cost $7.49 at the Guelph store, while the lotion was marked down to US$5.99 on the U.S. website, down from the regular price of $6.29. On the Shoppers Drug Mart website, it was priced at $8.99.

Brian Yarbrough, consumer and industrial analyst with Edward Jones, said the popular chain should manage to slightly undercut competitors on some items simply because none in Canada can rival its buying power.

But he said Target has no reason to match its U.S. prices if consumers are willing to pay more.

"I don't think they're really looking at 'OK, what are our prices in the U.S. and what are they going to be in Canada,' " he said.

"I think they're looking at it as 'OK, what is the standard price like amongst competitors in Canada and that's the range we need to be in; we don't need to worry about how we're priced in the States,' " he said.

It's a familiar phenomenon for Canadian shoppers and one that has captured the attention of analysts and politicians in recent years as the dollar hovered near and sometimes surpassed parity.

The Canadian dollar was trading at 97.27 cents US Tuesday morning.

Last month, a Senate committee urged the federal government to launch a comprehensive review of the country's tariff policy, one of several recommendations aimed at bridging the price gap with the U.S.

The report made it clear no one reason is responsible for the price differential, noting economies of scale, the bigger U.S. market, higher input costs and so-called country pricing -- whereby manufacturers and suppliers charge Canadian retailers a higher price for brand-name items than U.S. counterparts -- all play a role.

"Higher wages in Canada, transportation costs, obviously the cost associated with producing dual-language packaging, there's just a number of factors," Gibson said, adding the issue is "widely recognized" within the industry.

-- The Canadian Press

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