U.S. discount superchain says its considering opening stores in Canada
Rhonda Fauria, of North Attleboro, Mass., right, shops with her children Kiki, 3, left, and Caleb, 8, at a Target store in North Attleboro Dec. 20, 2009. (AP Photo/Gretchen Ertl)
Target Corp. is taking aim at the international market, and the U.S. discount superchain says its considering opening stores in Canada but shoppers shouldn't get too excited about the famed red bull's-eye brand heading north quite yet.
A spokeswoman for the company said it is too early to determine whether Target will actually make Canada its market of choice and that at this point it's only exploring the possibility.
"We haven't confirmed that it will be Canada," Hadley Barrows said in an interview.
"We're looking at Canada, Mexico and Latin America as options."
In other words, don't count on Target heading across the border any time soon. Barrows said it could take three to five years before a firm decision is made.
Some Canadian shoppers might be feeling a sense of deja vu as Target continues to waffle over whether it wants to cross the border. After all, this isn't the first time that Target has considered testing the waters in Canada.
Nearly 20 years ago, the company was part of a rush of American superstores who considered moving across the border and possibly buying up the operations of Woolco. Wal-Mart won that bid and Target scrapped its owns expansion plans.
Then, in 2004, Target was rumoured to be in talks with Hudson's Bay Co. to buy its Zellers stores, which would've launched an aggressive rollout across the country. Nothing ever came of it.
Target isn't the only major U.S. retailer to retreat from plans to expand into Canada. Both Bloomingdales and Nordstrom looked into opportunities before deciding that it wasn't worth the trouble.
Other U.S. companies have found huge success here with their own expansions. Hardware giant Loews has held its own against both Rona Inc. and the Home Depot, while Bath & Body Works found its niche beside the Body Shop and Lush.
Electronics giant Best Buy bought Future Shop and created a unique competitive relationship in the markets it dominates across the country.
One of the major deterrents for U.S. retailers is the lack of attractive retail space left at most popular shopping malls and supercentres, suggested Wendy Evans, head of retail consultancy Evans and Co. Consultants Inc.
U.S. retailers are "very discerning about locations," she said.
Without prime locations some retailers fear there would be too much risk in spending the money to invest in a foreign market.
Evans believes the economic downturn has cleared out some of the underperforming retailers and created a lot of "location opportunities that would not have been there a few years ago."
As a result, landlords have been willing to negotiate lower lease rates for storefronts left empty by failed companies for months or even longer, she said.
Retail analyst John Winter of John Winter and Associates said Target and other U.S. retailers should take notice of the major investment opportunity they're missing in Canada. He said Toronto's metropolitan area, for example, has one of the largest populations in North America, akin to Detroit.
"And we have a very high income compared to the Detroit," Winter added.
He believes shoppers in Toronto are looking for the type of high quality, yet affordable products that Target has built its name on, while Calgary, Montreal, and Vancouver are other logical markets.
In Canada, "there is a gap between Wal-Mart, Sears and the Bay. I think Target would fill that very nicely," Winter said.
For now, Target isn't jumping at the chance. This week, the company said it would dramatically rein in its U.S. expansion plans and focus on spending $1 billion to renovate 340 existing stores this year.
It's also looking at opening urban format stores, which are smaller locations centred within big American cities. Canadian supermarket chain Sobeys rolled out a similar plan a few years ago.
"At this point our main focus is continuing to grow within the United States," Barrows said.
"I'm certain the expansion is going to happen. We just don't know any other specifics."