Canadian Retailer - Spring 2013 - 17

After nearly two years filled with anticipation for
the arrival of Target to Canada, the doors have
now swung open to Canadian consumers. What
does the retailers’ arrival into the Canadian market mean, and what is its role in the country’s
ever-changing retail industry?
BY DANIELLE HARDER
THE NIGHT BEFORE Target opened its first store in Whitby, Ont.

during the retailer’s second round of ‘soft’ openings in Canada a midMarch snowstorm blanketed streets and left a cool wind in its wake.
But the bad weather didn’t stop Keri Young from packing up her
10-month-old son, Henry, to arrive in time for the 8 a.m. store opening.
“I’m pretty excited,” she says. “I live nearby and drive by every
day and I’ve been looking every day to see if it’s open.”
That kind of anticipation is something the U.S. chain is counting
on as it opens 124 stores across Canada this year—and it’s the kind
of anticipation its competition has been paying close attention to
since Target announced plans to move north two years ago.
Depending on which expert you ask, Target’s arrival in Canada is
either a “catalytic event” for the retail industry in Canada or just another entry into a market already experiencing the benefits and challenges of an economy that is globalizing with an increasing number
of new global retailers entering the country. Whatever the case, the
country’s retail landscape is shifting as big name chains look north,
and across the ocean, to a country with a stable economy, a strong
dollar and a retail market with lots of development potential.
Revolution?

“This is a complete rebuild,” he says. “The
logistical exercise involved in this is something
we’ve never seen at this level.”
Jeff Doucette, principal at the consulting firm,
Sales Is Not Simple, views Target’s entry into
Canadian retail as one of real influence. However, he disagrees about its potential to revolutionize the industry on its own.
“This is not the type of retail change we saw
with Chapters Indigo that put immense pressure on small town bookstores,” he says. “Target
won’t impact pricing any more than Walmart and
others already are. This is about new brands.”
What both experts do agree on is that the Canadian retail landscape will not look the same a
few years from now. Canada is fertile ground for
American and European retailers with little to no
room for expansion at home. In the case of U.S.
retailers, a shared border and cultural similarities
makes Canada an easy international move.
Then there’s the money. Mall performance in
Canada significantly outstrips mall performance south of the border. According to Colliers
International 2012 spring report, Canadian
malls were almost 50 per cent more productive
on a ($U.S.) sales per square foot basis in 2011.
The turning point for Canadian retail came
in the early part of the last decade, according to
Alex Arifuzzaman, a partner with InterStratics
Consultants Inc. In 2001, sales per square foot
were $320 in Canada and $360 in the U.S. Just
over a decade later, Canada rings in at $603 per
square foot with the U.S. trailing at $448. (All figures in U.S. dollars.)

Many experts point to the arrival of Walmart in Canada in the
early 1990s as a significant turning point in Canadian retail. Walmart was a “breakthrough” with its efficiency and discount prices,
says Jim Danahy, managing principal of retail
“This is not just an American phenomenon. It’s
consulting firm CustomerLAB.
But the time during which Walmart entered the about a global economic influence that’s sending
Canadian market was vastly different than today. capital to a safe haven, with a stable economy
The arrival of Target comes at a time that signi- and growth. It’s also one that’s under-stored by
fies not just a turning point, but a near revolution
American and European standards.”
within the industry. The emergence and growth
— JIM DANAHY
of the omni-channel retail experience coupled
CustomerLAB
with the continued proliferation of e-commerce
activity in Canada is changing the way retailers operate their busi“The Canadian dollar has changed the econesses. And, where Walmart entered the market store by store, nomics and everything else dramatically,” he
Target is arriving all at once, and it’s arriving along with a wave of says, adding that the geography of Canada is
other global retailers, including H & M, Zara, J.Crew, Nordstrom also making it an attractive market for foreign
companies. While it may have one-tenth the
and more.
“This is not just an American phenomenon,” he says. “It’s about population of the U.S., one-third of Canadians
a global economic influence that’s sending capital to a safe haven, live within three major markets.
“They can get a very good presence by only
with a stable economy and growth. It’s also one that’s under-stored
investing in a few locations,” Arifuzzaman says.
by American and European standards.”
But that’s not to take away from Target’s impact, Danahy adds.
Several recent announcements underscore the
Target is spending $10-million per store on renovations—in a short desirability of the Canadian retail market. Spanspan of time.
ish-owned Zara Homes has announced it will

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