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Target Canada

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Target Canada Company
Company typeSubsidiary
IndustryDiscount department store
PredecessorZellers
Founded2011
HeadquartersMississauga, Ontario
Number of locations
135[1]
Area served
Canada
Key people
Tony Fisher[2]
(President)
ParentTarget Corporation
WebsiteTarget.ca

The Target Canada Company[3] 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 said grocer), and other retailers such as Sears Canada, Canadian Tire, and Shoppers Drug Mart.[4]

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.[5][6] 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 3 provinces on May 6, 2013.[7][8] Target opened more stores in four provinces including cities in Regina and Saskatoon on July 16, 2013.[9] On September 6, 2013, Target Canada opened more stores between September 17 and October 18 including the provinces of Quebec and Nova Scotia.[10] On October 28, 2013, Target Canada opened 33 locations between November 13 and November 22, including the provinces in Manitoba, New Brunswick, Prince Edward Island and Newfoundland and Labrador.[11]

History

A Target Store in Shoppers World Brampton in Ontario.
A Target Store in Hillcrest Mall in Richmond Hill, Ontario.

2010: Consideration of Canadian operations

Regular rumours surfaced since at least 2004 that Target was interested in expanding into Canada by acquiring Zellers outright.[12] 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.[13]

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.[14] 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.[3]

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,[15][16] and after March 31, 2013, there will be three Zellers stores left in Etobicoke, Montréal-Nord, and Surrey.[17][18][19]

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.[20] In September 2011, Target unveiled 84 additional selections, bringing the total number of Zellers leases acquired to 189 (instead of 220 as originally announced).[5] The first store opening cycle would be in March/April 2013, followed by four additional cycles later that year.[6] Zellers locations to be converted were typically closed for at least six to nine months for significant remodelling and renovation.[1] Target announced plans to hire 27,000 new employees to support its expansion into Canada,[21] including 5,000 in Quebec,[22] and that its food and grocery items in Canada would be supplied by Sobeys.[23]

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.[1] Target would sell the remaining 64 to 74 acquired locations to other retailers, including 39 already resold to Walmart Canada.[24]

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.[25] 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.[26]

Target confirmed the list of its locations in July 2012.[6] The chain finalized its 127 stores to open in 2013.[6] Of this total, 125 were converted former Zellers stores.[6] The other two locations in Niagara Falls and Centre Laval were sites previously occupied by Walmart stores.[6][27][28] The first Target stores in Canada were opened on March 5, 2013 in the Ontario communities of Guelph, Fergus, and Milton,[29] being close to one of Target Canada's three distribution centres.[30]

Target Canada includes smaller Starbucks stores in the majority of its locations.[31] A notable Canadian clothing brand, Roots, is being temporarily sold in Target Canada.[32]

Target Canada president Tony 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.” Fisher expected that some Canadian consumers would continue to cross the border and shop at Target stores in the United States. 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 that local market.[33][34]

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 dissapointing, dragging down its parent company's second quarter results. 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,[35] 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. Despite the initial high traffic at new Target Canada 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 Cos., Shoppers Drug Mart Corp. and Walmart Canada.[4][36]

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.[35]

Target store at Scottsdale Centre in Delta, BC

Timeline

Trademark issues

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,[38] and a Target convenience store chain based in Toronto.[39]

In advance of its entry into Canada, Target Corporation has attempted to solidify its rights to the "Target" brand name in Canada by buying out the Canadian trademark rights of some these existing users,[38][39] 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 claims 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.[40] 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.[41]

INC Group opened a small Target Apparel retail store adjacent to the company's head office in December 2003.[41][42] 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.[42][43] Target has challenged INC's rights to the Target Apparel trade name on numerous occasions; INC has thus far succeeded in retaining those rights, but faced a further court challenge with a trial set to start in 2012.[42][44]

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.[45]

References

  1. ^ a b c d "Target Finalizes Real Estate Transaction with Selection of 84 Additional Zellers Leases". Target Pressroom. 23 September 2011. Retrieved 26 September 2011.
  2. ^ "Target Canada names president". Canadian Grocer. 2011-01-19. Retrieved 2011-07-01.
  3. ^ a b c d e "Transaction Agreement between Zellers Inc., Hudson's Bay Company, Target Corporation and Target Canada Co". U.S. Securities and Exchange Commission. 2011-01-12. Retrieved 2011-03-28.
  4. ^ a b [1]
  5. ^ a b c "Hudson's Bay Company Confirms Final List of 189 Zellers Locations to be Assumed by Target". Canada Free Press. September 23, 2011.
  6. ^ a b c d e f g "Target Confirms Store Locations Opening in 2013". Target Corporation. Retrieved October 24, 2012.
  7. ^ www.huffingtonpost.ca/2013/05/06/target-coquitlam-langley-victoria-bc-stores_n_3225447.html
  8. ^ a b c "Target Announces Soft Opening of 24 Stores in Western Canada". Canada Newswire. 2013-05-06. Retrieved 2013-05-07.
  9. ^ a b c d "Target Target Announces Opening of 20 Additional Store Locations Across Canada". Canada Newswire. 2013-07-04. Retrieved 2013-07-17.
  10. ^ a b c "Target to Open First Stores in Quebec and Nova Scotia". Canada Newswire. 2013-09-06. Retrieved 2013-09-07.
  11. ^ a b c "Target Set to Complete Canadian Store Openings for 2013". Canada Newswire. 2013-10-28. Retrieved 2013-10-30.
  12. ^ Freeman, Sunny (2012-07-27). "Zellers stores could soon be extinct". Metro News. Retrieved 2012-10-24.
  13. ^ Flavelle, Dana (2010-01-22). "Cheap-chic retailer Target coming to Canada". Toronto Star. Retrieved 2011-06-27.
  14. ^ a b John Tilak, "UPDATE 2-Target to enter Canada with Zellers deal, own plans: Target plans to open up to 150 stores in Canada", Reuters January 13, 2011.
  15. ^ "Retailer Hudson's Bay Co. to close most of its remaining 64 Zellers stores". Toronto Star.
  16. ^ "Return Policy". Zellers.
  17. ^ "Zellers will stick around Canada's three biggest cities after Target arrives". Retrieved January 14, 2013.
  18. ^ "HBC store locator". Retrieved January 14, 2013.
  19. ^ "Zellers store to stay open at Semiahmoo Shopping Centre". Retrieved January 14, 2013.
  20. ^ a b Target Corporation (2011-05-26). "Target Selects Initial Zellers Leases, Vast Majority to Become Target Stores". Target Corporation. Retrieved 2011-05-26.
  21. ^ Target starts staffing Laval locations
  22. ^ Tencer, Daniel. "Target Canada: Retailer Plans To Hire 'Thousands' Ahead Of Canadian Expansion". Huffington Post. Retrieved 26 September 2011.
  23. ^ "Sobeys to Supply Target Canada with Food and Grocery Products". Target Pressroom. Retrieved 26 September 2011.
  24. ^ The Canadian Press (2011-06-24). "Walmart picks up 39 Zellers sites from Target". CBC.ca. Retrieved 2011-06-24.
  25. ^ "Zellers employees walk away empty-handed in $1.825-billion deal". Metro News. Retrieved 24 October 2012.
  26. ^ http://www.cbc.ca/news/canada/windsor/story/2013/03/18/wdr-target-cross-border-shopping-windsor.html
  27. ^ Flavelle, Dana (2012-07-27). "Target plans up to 135 Canadian stores by 2013". Toronto Star. Retrieved 2011-09-23.
  28. ^ St-Armour, Stéphane (2012-07-26). "La chaîne Target s'installera au Centre Laval". Courrier Laval. Retrieved 2012-10-24.
  29. ^ "Target opens first Canadian stores today". CBC News. The Canadian Press. 5 March 2013. Retrieved 2013-03-05.
  30. ^ Strauss, Marina (4 March 2013). "With tips from the toy aisle, Target ready to launch". The Globe and Mail. Retrieved 2013-03-05.
  31. ^ "Target Canada to feature Starbucks, not Tim Hortons". Financial Post. Retrieved 11 March 2012.
  32. ^ "Target Canada announces collaboration with iconic Canadian brand Roots". Toronto Star. Retrieved 2 February 2013.
  33. ^ http://www.montrealgazette.com/news/price+parity+with+Target+Canada/8158515/story.html
  34. ^ [2]
  35. ^ a b [3]
  36. ^ [4]
  37. ^ http://www.thestar.com/business/2013/03/18/target_canada_opening_17_new_stores_tomorrow_at_8_am.html
  38. ^ a b Canadian Intellectual Property Office (2011-06-28). "Canadian Trade-Mark Data: Application No. 1021150 / Registration No. TMA375459". Retrieved 2011-07-01.
  39. ^ a b Canadian Intellectual Property Office (2011-06-28). "Canadian Trade-Mark Data: Application No. 0633226 / Registration No. TMA375459". Retrieved 2011-07-01.
  40. ^ Canadian Intellectual Property Office (2011-06-21). "Canadian Trade-Mark Data: Application No. 0460725 / Registration No. TMA261305". Retrieved 2011-06-27.
  41. ^ a b Canadian Intellectual Property Office (2011-06-21). "Canadian Trade-Mark Data: Application No. 1521944". Retrieved 2011-06-27.
  42. ^ a b c Strauss, Marina (2010-10-14). "Target has a problem. Its name is Target". The Globe and Mail. Retrieved 2011-07-01.
  43. ^ Carmichael, Harold (2010-12-??). "Target Apparel opens up". Sudbury Star. Retrieved 2011-07-01. {{cite web}}: Check date values in: |date= (help)
  44. ^ The Canadian Press (2011-06-24). "Target bid to block Target Apparel name rejected". CBC News. Retrieved 2011-07-01.
  45. ^ Shaw, Hollie (2012-02-01). "Target settles name game dispute". Financial Post. Retrieved 2012-02-05.
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