|Industry||Discount department store|
|Number of locations||135|
|Key people||Mark Schindele (05/20/2014 - present), Tony Fisher (terminated 05/20/2014)
Target Canada Co. is the 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 is Walmart; while there is 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, and Shoppers Drug Mart.
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; these stores numbered 127 as of May 21, 2014.
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–present: 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.
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 November 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.
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.” Canadian packaging laws, protectionist tariffs on some foods and exclusive wholesale arrangements mean that Target's American distribution network could not service its Canadian stores. Also Canadian Target stores did not have local authority to order their own merchandise; this resulted in the Windsor 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 river from Windsor. Supply chain problems meant that Target Canada stores often had empty shelves for three weeks.
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 Loblaw, Shoppers Drug Mart, and Walmart Canada. In addition while Target Canada aimed to have its customers do "one-stop shopping", Canadians 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 Securities Inc., 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 heath, 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% of the popular items in the basket thanks to its own pricing “rollbacks,” 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 has projected for its Canadian operations to bring in 10 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.
- January 12, 2011: Agreement signed.
- January 13, 2011: Announcement of sale.
- May 26, 2011: Announcement of first 105 site selections.
- June 24, 2011: Announcement of resale of 39 selections to Walmart.
- September 23, 2011: Announcement of final 84 site selections and partnership with Sobeys.
- January 31, 2012: Earliest possible date that Target might require some acquired locations to be vacated by Zellers.
- March 5, 2013: First Target locations open in Guelph, Fergus, and Milton, all of which are in Ontario.
- March 19, 2013: 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.
- March 28, 2013: Burlington Mall, Shoppers World Danforth, Square One Shopping Centre and Trinity Common Mall locations open.
- March 31, 2013: All acquired locations must be vacated by Zellers by this date.
- May 7, 2013: More Target stores open in 9 British Columbia locations, 10 Alberta locations and 3 Manitoba locations.
- May 14, 2013: Target stores open in Pine Centre Mall in Prince George and The Shoppes at Shawnessy in Calgary.
- July 16, 2013: Target stores opens in 2 British Columbia locations, 2 Alberta locations, 3 Saskatchewan locations and 11 Ontario locations.
- July 23, 2013: The Cataraqui Town Centre location opens in Kingston, Ontario.
- July 30, 2013: The Bramalea City Centre location opens in Brampton, Ontario.
- September 17, 2013: Target stores opens in 4 locations in Eastern Ontario, 7 Quebec locations and 3 Nova Scotia locations.
- October 18, 2013: Target stores opens 9 locations all in the province of Quebec.
- November 13, 2013: Target opens 31 more locations in 9 provinces including the provinces of New Brunswick, Prince Edward Island and Newfoundland and Labrador.
- November 22, 2013: Target opens 2 more locations in The Pen Centre in St. Catharines, Ontario and Carrefour de l'Estrie in Sherbrooke, Quebec.
- March 14, 2014: Target opens three locations in The Stockyards in Toronto, Ontario, Kingsway Mall in Edmonton, Alberta and Hillside Shopping Centre in Victoria, British Columbia.
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.
In advance of its entry into Canada, Target Corporation attempted to solidify its rights to the "Target" brand name in Canada by buying out the Canadian trademark rights of some these existing users, in addition to filing new applications of its own.
Target Apparel trademark agreement
However, 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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