Our neighbourhood mall has been buzzing with activity for months as construction crews busily convert the old Zellers location into a spanking new Target. The store, set to open next month as part of the American retailer’s first wave, is already attracting shoppers’ attention: this weekend I watched one wannabe-customer after another walk to the cladding at the end of the corridor and stare through the peephole, hoping to catch a glimpse of the shopping nirvana that apparently awaits us all.
I’m not entirely convinced we’ll ever find paradise in the fashion aisle – it’s a store, people, nothing more – but it’s clear Target’s impending arrival is already having a positive effect on its soon-to-be competitors.
A Globe and Mail article, Canadian Tire, Loblaw in ‘battle mode’ ahead of Target arrival, outlines the major changes now underway as incumbent stores prepare themselves to face off against this new competitor. Although Canadian Tire isn’t a direct competitor to Target, it sits in the new arrival’s cross-hairs in a number of product categories, including small appliances. Loblaw’s Joe Fresh is similarly exposed with its Joe Fresh clothing brand.
Walmart Canada likely represents Target’s biggest competitor, and it’s spending big-time – over $450 million this year alone – to boost its Canadian operations. It’s opening nine new supercentres across the country, and converting an existing 28 locations to the large-format layout. By next January, it’ll have 388 locations across the country, and will add 7,000 positions to bring its total Canadian employment to 94,000. Target plans to eventually open between 125 and 135 stores as part of its initial assault on the Canadian market. It acquired the leases of 189 Zellers locations in 2011.
Speaking to the Canadian Press last month, Walmart Canada President and CEO Shelley Broader said its expansion wasn’t driven by intensifying competition. But she did admit to a distant connection. A little competition isn’t a bad thing for consumers.
“Any time there is something new that happens in the market, any time there is a new competitor, what it should do is make you sharper, make you stronger and make you more focused on your core strategy,” she said. “We’re only becoming a better Walmart, a better low-cost operator, a better low-priced operator, a better one-stop shopping destination for our customers, based on exactly what they’re telling us.
“The way that we look at the market isn’t really based on any specific competitor or series of competitors,” she added.
Bargain-hunting Canadians shouldn’t expect the same screaming deals that American shoppers get. Target Canada CEO told the Globe & Mail last month that price parity isn’t in the cards.
“We’ve built our business model to be incredibly competitive with the lowest-priced leaders in Canada,” Fisher said. “We’re not building our business model as compared to the U.S.”
A Field Agent Canada survey conducted for the Globe suggested similar pricing disparities at Walmart Canada, with a basket of common household goods costing 23% more north of the border.
The good news: Target’s arrival is forcing competitors – big and small, direct and indirect – to invest in their locations, refine their pricing and ratchet up their customer service levels. Consumers may not get the rock bottom prices they had originally hoped for, but they’ll win either way no matter where they choose to shop.
Image credit: FREDERIC J. BROWN/AFP/Getty Images