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Retail war predicted when Target invades Canada

By: Geoff Kirbyson

Thursday, Feb. 21, 2013 at 10:08 AM | Comments: 0

‘I think it’s going to be WW2 when Target opens up in a few weeks. There will be about 13 million square feet of Target suddenly opening across Canada, and that’s going to cause a great fight between Target and Walmart, the Bay and Sears’ — John Winter, a Toronto-based retail analyst (THE ASSOCIATED PRESS ARCHIVES)

TARGET is still several weeks away from making its much-anticipated splash in the Canadian market, but after dipping its toe in last week, the ripples could turn into a tidal wave.

The Minneapolis-based retail giant has launched its own REDcards, a credit card and debit card that have arguably the clearest loyalty program in Canada. Simply hand it over and you won't receive any points or miles, you'll get an immediate five per cent discount on your purchase.

Even when the REDcards are being used at other retailers, customers earn Target gift cards.

John Winter, a Toronto-based retail analyst, said this shot across the bow will soon lead to a full-scale battle.

"I think it's going to be WW2 when Target opens up in a few weeks. There will be about 13 million square feet of Target suddenly opening across Canada, and that's going to cause a great fight between Target and Walmart, the Bay and Sears. It's going to be all-out war," he said.

Indeed, the Bay recently launched an overhaul of its loyalty reward program in an effort to firm up its customer base.

Industry statistics show that as consumers sign up for loyalty programs of specific retailers, they spend significantly more money in those stores. The Target MasterCard is backed by the Royal Bank and can be ordered online at either target.ca or rbc.com.

While the battle rages, consumers are sure to benefit, Winter said, as each retailer will be desperately trying to hold onto its current clientele while simultaneously attempting to steal others from its competitors.

Of course, that means lower prices. But Target's ability to generate virtually unparalleled volume will turn those deals into a revenue blitzkrieg.

"Target should be going from zero dollars to $3 billion in a year. They'll do better productivity than Sears and the Bay and they'll start to approach Walmart. They'll be firing on all cylinders from Day 1," Winter said. "Target is particularly good at offering everyday low prices, but they're a quality discounter, too. Not that Walmart isn't, but they're extremely good at what they do."

When Target will cut the ribbon on the first of its 124 stores, including five in Manitoba, is still a mystery. Joanne Elson, the retailer's Toronto-based communications manager, said it will start opening locations next month, but it hasn't released dates for specific cities yet.

She said each former Zellers store Target is taking over is receiving a makeover worth about $10 million so the shopping experience Canadians have come to love south of the border will be the same on the north side.

The Manitoba Target sites include Kildonan Place Shopping Centre, Grant Park Shopping Centre and Southdale Centre in Winnipeg and Shoppers Mall in Brandon. Plans are being firmed up to build a stand-alone Target near Polo Park shopping centre once the Canad Inns Stadium has been torn down.

"Expanding into Canada has always been a part of our long-term strategy," Elson said. "The leasehold agreement with Zellers provided a great opportunity for us to get immediate scale in the country and open a large number of stores in a fairly short period of time.

"We feel we have something to offer Canadians that they haven't seen in the retail market."

geoff.kirbyson@freepress.mb.ca

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