Some Canadians Complain About Target’s Selection, Price
Target Corporation continues to receive mixed reviews from its expansion into our neighbor to the north. With grand openings not meeting expectations, some Canadian shoppers are reportedly finding Target’s prices and selection disappointing.
Minneapolis-based Target has opened 48 retail locations throughout Canada, which is the only country outside of the United States in which Target has planted its feet.
Target initially experienced some backlash over prices at its first three pilot stores in Canada. Prices have historically been higher in Canada stores compared to their U.S. counterparts due in part to taxes, labor, real estate costs, and, most recently, new tariffs on goods entering Canada, according to Paul Trussell, retailing analyst at Deutsche Bank Securities, Inc. Prices at Target’s Canada stores are an average of 3 percent higher than at U.S. locations, says Trussel.
Now, in addition to disappointing prices, some Canadian customers are finding Target’s shelves bare or half-empty. According to the Star Tribune, Target’s March launch in Toronto saw an unexpected demand that resulted in stores running out of key products like milk and men’s clothing. And openings in British Columbia and Alberta were met with similar inventory shortages.
Analysts are skeptical of Target’s ambitious Canadian venture, according to the Minneapolis newspaper. The company normally opens about 20 U.S. stores a year, but Target’s goal is to open 124 within the first year of moving into Canada.
“Given the size and excitement surrounding this launch, it’s not fair to expect Target to have everything run like clockwork,” Amy Koo, an analyst with Kantar retail consulting firm in Boston, told the Star Tribune.
According to Doug Stephens, a Toronto-based retail consultant and author, the high expectations set the bar too high for Canadian shoppers, and marketing has been stronger than the delivery.
“There has been a tremendous amount of hype around the launch, much of it perpetuated by Target itself,” Stephens told the newspaper. So when the grand openings aren’t magnificent, it “takes the edge off” for new consumers unfamiliar with the brand, he said.
John Morioka, Target Canada’s senior vice resident of merchandising, told the newspaper that Canadians need to be educated about one-stop shopping. With Canada’s smaller households, the concept of buying a whole cart full of groceries in one visit—a trend that retailers like Target rely on—is foreign to them.
However, despite its setbacks, Target reported on May 22 that the 24 stores it opened in Canada throughout March had generated $86 million in sales during their two months of operation, and it expects them to produce profits after a year.
Some analysts remain optimistic: “They will correct [Canada] over time,” Brian Yarbrough, a retail analyst with Edward Jones Investments, told the Star Tribune. “Over the long term, they should be able to do pretty well.”
Target is Minnesota’s second-largest public company based on revenue, which totaled about $72 billion for the fiscal year that ended February 2—up 5 percent from the prior year. It operates 1,784 stores across the United States.