|Founded||March 5, 2013Ontario, Canadain|
|Defunct||April 12, 2015|
|Headquarters||Mississauga, Ontario, Canada|
Number of locations
|Aaron Alt (CEO)|
Number of employees
|Slogans||Expect More. Pay Less.
Target Loves Canada
Target Canada Co. was a Canadian subsidiary of United States-based discount department store chain Target Corporation, formed in 2011 to oversee the company's Canadian operations. Target Canada's main rival in the discount store category was Walmart; while there was also competition with supermarket chains such as Loblaws, Metro, and Sobeys (despite having an agreement with Sobeys), and other retailers such as Sears Canada, Canadian Tire, Shoppers Drug Mart, and Rexall.
In 2011, Target acquired the leaseholds of 189 locations operated by Hudson's Bay Company's (HBC) Zellers discount chain, with the intent to use 125 of these sites to open Target stores in 2013. Target opened its first Canadian stores in March 2013; as of January 2015, it had 133 locations across the country.
The chain's Canadian expansion was commercially unsuccessful, as the chain did not live up to the high expectations of Canadian consumers due to their higher product prices and a reduced product selection when compared to US Target stores. As a result of these and other issues, store traffic and sales significantly decreased in the months following the store openings, while analysts believed that Target was being too aggressive in building its Canadian operations. Target Canada racked up losses of $2.1 billion in its short life, and the store's botched expansion was characterized by the Canadian and US media as a "spectacular failure", "an unmitigated disaster", and "a gold standard case study in what retailers should not do when they enter a new market."
On January 15, 2015, Target Canada filed for bankruptcy, announced that it would close all of its Canadian stores, and began liquidating their inventory. All Target Canada stores were closed by April 12, 2015.
- 1 History
- 2 Timeline
- 3 REDcard
- 4 Trademark issues
- 5 References
- 6 External links
2010: Consideration of Canadian operations
Regular rumours surfaced since at least 2004 that Target was interested in expanding into Canada by acquiring Zellers outright. In January 2010, Target publicly indicated long-term plans to expand internationally, likely including Canada, but that those plans would not take effect until 2013 at the earliest.
2011–2013: Leaseholds acquisition and partnership
On January 13, 2011, Target announced that it would purchase the lease agreements of up to 220 Zellers stores for C$1.825 billion. Under the agreement, Zellers would initially sublease the properties, and continue to operate them as Zellers locations until at least January 2012 and at latest the end of March 2013.
Target did not buy the Zellers chain outright, which was left with 64 stores in less desirable locations. HBC tried unsuccessfully to find a buyer for the remaining stores and initially planned to continue operating Zellers as a smaller chain. However the geographical constraints of serving these far-flung Zellers outlets meant that operating them was no longer economically viable, so HBC announced on July 26, 2012, that it would close almost all of these stores,
In May 2011, Target revealed its first 105 selections and stated that the vast majority of those in this first group would be converted to Target outlets. In September 2011, Target unveiled 84 additional selections, bringing the total number of Zellers leases acquired to 189 (instead of 220 as originally announced). The first store opening cycle would be in March/April 2013, followed by four additional cycles later that year. Zellers locations to be converted were typically closed for at least six to nine months for significant remodelling and renovation. Target announced plans to hire 27,000 new employees to support its expansion into Canada, including 5,000 in Quebec, and that its food and grocery items in Canada would be supplied by Sobeys.
After the Zellers stores at the selected locations closed, Target planned to renovate between 125 and 135 of them, and reopen them under the Target banner. Target would sell the remaining 64 to 74 acquired locations to other retailers, including 39 already resold to Walmart Canada.
Unlike Walmart's entry to Canada with the acquisition of the Woolco stores in 1994, Zellers employees were not retained by Target nor Walmart, and they had to re-apply for their position to continue working in their same locations. Target Canada stated that former Zellers workers were guaranteed an interview though not a job, however the United Food and Commercial Workers of Canada complained that many Zellers employees were not hired including those with long years of service.
Target confirmed the list of its locations in July 2012. The chain finalized its 127 stores to open in 2013. Of this total, 125 were converted former Zellers stores. The other two locations in Niagara Falls and Centre Laval were sites previously occupied by Walmart stores. The first Target stores in Canada were opened on March 5, 2013 in the Ontario communities of Guelph, Fergus, and Milton, being close to one of Target Canada's three distribution centres.
2013–2015: Years of Operation
On March 5, 2013, three Target stores in Milton, Fergus and Guelph, Ontario were opened to the public and operating as test stores, and a further 17 stores in Ontario opened on March 19, 2013. Four additional stores in Ontario were opened on March 28, 2013, followed by a number of openings in Western Canada in three provinces on May 6, 2013. Target opened more stores in four provinces including cities in Regina and Saskatoon on July 16, 2013. On September 6, 2013, Target Canada opened more stores between September 17 and October 18, including the provinces of Quebec and Nova Scotia. On October 28, 2013, Target Canada opened 33 locations between November 13 and 22, including in the provinces of New Brunswick, Prince Edward Island and Newfoundland and Labrador. On March 14, 2014, Target opened three stores in the cities of Toronto, Edmonton and Victoria. On August 1, 2014, Target opened three stores in the cities of Barrie, Mississauga and Candiac, Quebec.
Target Canada president Anthony S. "Tony" Fisher expected that some Canadian consumers would continue to cross the border and shop at Target stores in the United States. Fisher acknowledged that the Canadian stores would not have price parity with their U.S. counterparts, saying "Transportation costs are higher, distribution costs are higher, fuel costs are higher, wage rates vary across the country, the tax rates are different, cost of goods are different, the duties — I think the scale we have here in Canada is quite different from the incredibly different, densely populated U.S. marketplace." Due to complexities and other legal requirements, Target's existing distribution network could not be used to service Target's Canadian locations. In addition, Canadian Target stores did not have local authority to order their own merchandise; this resulted in the Windsor, Ontario stores stocking Toronto Maple Leafs and Toronto Blue Jays apparel, instead of that of the Detroit Red Wings and Detroit Tigers, which were more popular in Windsor, given its proximity to Detroit, located across the Detroit River from Windsor. Supply chain and demand issues also led to situations where some of the early locations were not adequately stocked in certain product categories, resulting in empty shelves.
Target Corporation's expansion into Canada hoped to capitalize on Canadian shoppers who frequently crossed the border for its U.S. stores, however this may have backfired as Canadian shoppers felt that Target Canada stores failed to meet the high expectations set by their U.S. counterparts. Target Canada enjoyed a strong opening, but subsequent results had been disappointing, dragging down its parent company's second quarter results. Despite the initial high traffic at Target's new stores, customers were not returning frequently enough to these stores to buy the basic household items, as that market was dominated by entrenched Canadian grocery and drug retail chains such as Loblaws, Shoppers Drug Mart, and Walmart Canada. In addition while Target Canada aimed to have its customers do "one-stop shopping"; Canadian consumers generally pick and choose between different retailers' strengths. While Target Canada stores were said to be an improvement over the untidy preceding Zellers stores, some Canadians lamented that they missed the deals found at Zellers.
Paul Trussell, retailing analyst at Deutsche Bank, suggested that "traffic has slowed below expectations in recent weeks, driven partly by Canadians’ perception that prices are too high, both relative to Walmart Canada and Target’s U.S. locations. While shoppers appreciate the higher quality assortment, especially in discretionary categories, the complaints on pricing were alarming." Target failed to anticipate that Canadian consumers would expect the retailer to match the lower prices in its U.S. stores, leading to some alienation and confusion, although Target CEO Gregg Steinhafel defended this practice saying "trying to compare prices at Target Canada with that of certain Target stores in the U.S. would be like comparing prices in Boston to prices in rural Iowa". Deutsche Bank’s pricing survey on 31 health, beauty and food items at Canadian Target and Walmart stores found that while Target had a cheaper basket of goods by 19¢, Walmart had a pricing advantage of 65 percent of the popular items in the basket thanks to its own "Rollback" prices, likely furthering consumers’ current price perceptions. Other American chains operating in Canada did not suffer a backlash from Canada-U.S. pricing disparities as much, likely as Target had hyped its Canadian stores to provide the same experience as their U.S. counterparts.
Target projected for its Canadian operations to bring in ten percent of its profits by 2017. However, experts suggested that it wanted too much and too quickly from Canadians, while underestimating domestic competition. The disappointing results from Canadian stores were said to be a major reason, along with the January 2014 major security breach, for the resignation of parent company CEO Gregg Steinhafel, though Target reiterated its commitment to the Canadian market. Two weeks after Steinhafel's abrupt departure, Target Canada president Anthony S. "Tony" Fisher was dismissed and replaced by Mark Schindele, who had been serving as Target's senior vice-president of merchandising operations.
On January 15, 2015, Target Canada announced that it had filed for bankruptcy and that it would close all 133 of its Canadian stores. Two planned new store openings, one at the Harbour Plaza condo project in the South Core of downtown Toronto, and the Bayshore Shopping Centre in the west end of Ottawa, were cancelled due to the closure.
The subsidiary was projected to only make a profit by 2021; by 2015, Target had lost $2.1 billion. Target Canada would have been unable to meet its employees' payroll for the week of January 16, 2015 if it had not filed for bankruptcy court protection from creditors.
Liquidation sales began at the stores the following day; Target began to close stores on March 18, 2015, with 16 locations scheduled to close that week, and 96 in total closed by April 5, 2015. The last of the stores closed on April 12, 2015.
In May 2015, the company returned some of its leases back to their landlords, and began the process of auctioning off leases and properties to other new owners. Canadian Tire announced plans to acquire 12 locations, Walmart Canada reached a deal to acquire 13 locations (including the aborted Bayshore Shopping Centre location) and one of its distribution centres, and Lowe's also reached a deal to acquire 13 locations and a distribution centre.
- 12 January: Agreement signed.
- 13 January: Announcement of sale.
- 26 May: Announcement of first 105 site selections.
- 24 June: Announcement of resale of 39 selections to Walmart.
- 23 September: Announcement of final 84 site selections and partnership with Sobeys.
- 31 January: Earliest possible date that Target might require some acquired locations to be vacated by Zellers.
- 5 March: First Target locations open in Guelph, Fergus, and Milton, all of which are in Ontario.
- 19 March: More Target locations open in Ontario, including East York Town Centre, Aurora Shopping Centre, Cloverdale Mall, Cambridge Centre, Centre Mall (in Hamilton), Shoppers World Brampton, Centerpoint Mall, Taunton Road Power Centre, Masonville Place, Upper Canada Mall, Devonshire Mall, and Durham Centre.
- 28 March: Burlington Mall, Shoppers World Danforth, Square One Shopping Centre and Trinity Common Mall locations open.
- 31 March: All acquired locations must be vacated by Zellers by this date.
- 7 May: More Target stores open in 9 British Columbia locations, 10 Alberta locations and 3 Manitoba locations.
- 14 May: Target stores open in Pine Centre Mall in Prince George and The Shoppes at Shawnessy in Calgary.
- 16 July: Target stores opens in 2 British Columbia locations, 2 Alberta locations, 3 Saskatchewan locations and 11 Ontario locations including Intercity Shopping Centre in Thunder Bay.
- 23 July: The Cataraqui Centre location opens in Kingston, Ontario.
- 30 July: The Bramalea City Centre location opens in Brampton, Ontario.
- 17 September: Target stores opens in 4 locations in Eastern Ontario, 7 Quebec locations and 3 Nova Scotia locations.
- 18 October: Target stores opens 9 locations all in the province of Quebec.
- 13 November: Target opens 31 more locations in 9 provinces including the provinces of New Brunswick, Prince Edward Island and Newfoundland and Labrador.
- 22 November: Target opens two more locations in The Pen Centre in St. Catharines, Ontario and Carrefour de l'Estrie in Sherbrooke, Quebec.
- 14 March: Target opens three locations in The Stockyards in Toronto, Ontario, Kingsway Mall in Edmonton, Alberta and Hillside Shopping Centre in Victoria, British Columbia.
- 1 August: Target opens three locations in Park Place in Barrie, Ontario, Erin Mills Town Centre in Mississauga, Ontario and Carrefour Candiac in Candiac, Quebec.
- 15 January: Target announces it is ceasing all Canadian retail operations and will proceed to close 133 outlets.
- 23 January: Target closes all Starbucks outlets in their stores.
- 5 February: All Target stores start liquidation process.
- 15 May: Target US has set up employee trust fund to guarantee Target Canada team members get paid till May 15 whether store closed earlier or not.
- 6 March: Ivanhoe Cambridge & Oxford Landlords purchase back 11 coveted Target store leases at premier mall locations for an estimated $138 million.
- 18 March: Stratford, Ontario, Longueuil and Edmonton (Bonnie Doon Centre) locations close.
- 22 March: 13 more locations close.
- 4 April: Bramalea City Centre store in Brampton closes with most other stores left open.
- 12 April: All Target Canada stores were closed by this date.
- 6 May: Canadian Tire acquires leases for 12 stores at a cost of $17.7 million.
- 8 May: Walmart Canada acquires leases for 13 stores and distribution centre in Cornwall, Ontario for $165 million. The new stores will create about 3400 jobs.
- 11 May: Lowe's Canadian unit acquires 13 store leases and distribution centre in Milton, Ontario.
The REDcard was offered in Canada as either a debit card or a credit card. Around 30,000 Canadians signed up for the REDcard prior to stores opening. Like its American counterpart, the cards offered a 5% discount on almost all Target purchases and the debit card allowed up to a $60 cash withdrawal. The Canadian version did not offer free online shipping (as online shopping was unavailable in Canada), a 30-day extended return period, a 1% donation to K–12 schools on almost all purchases, a Visa credit card or a store-only credit card that are available in the United States. Target Canada continued to honour the REDcard throughout its liquidation sales.
In the absence of the Target Corporation chain in Canada, a number of retail companies, without any affiliation to the American company, made use of the "Target" name for various purposes. A regional variety store chain in Newfoundland and Labrador operated under the Target banner during the 1980s and early 1990s. There has also been a liquor store named Target Liquor in Alberta, and a Target convenience store chain based in Toronto.
Before it entered Canada, Target Corporation attempted to solidify its rights to the "Target" brand name in Canada by buying the Canadian trademark rights of some these existing users, in addition to filing new applications of its own.
Target Apparel trademark agreement
Target's expansion into Canada was threatened by one other party that claimed the Canadian rights to "Target" with respect to clothing. The Canadian trademark "Target Apparel" was registered in 1981 by Dylex Ltd., a Canadian retailer defunct since the early 2010s, covering "men's clothing, namely suits, pants, jackets, and coats". The rights to the mark were acquired in 2001 by Fairweather Ltd., part of the INC Group of Companies owned by Isaac Benitah. Target Apparel originally served as a private-label clothing brand, and not as the name of a retail store, and Fairweather would not apply to extend its trademark to cover retail services until April 2011.
INC Group opened a small Target Apparel retail store adjacent to the company's head office in December 2003. In late 2010, soon after Target's announcement that it planned to expand into Canada (but before the Zellers announcement), INC began expanding the banner to other higher-profile locations, including conversions of some of its existing Labels stores. Target challenged INC's rights to the Target Apparel trade name on numerous occasions; INC had succeeded in retaining those rights, but faced a further court challenge with a trial set to start in 2012.
On February 1, 2012, it was announced that Fairweather Ltd. and Target reached an agreement concerning the use of the Target name in Canada. Under said agreement, Fairweather would cease use of the Target Apparel name by 2013, giving Target Canada complete ownership of the Target brand in Canada.
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|Wikimedia Commons has media related to Target Canada.|
- Off-Target: How a U.S. retail giant misread the Canadian market Chris Sorensen, January 21, 2015, Maclean's