News & Resources

Target in Canada: the Economic Pros and Cons

March 8, 2013
3 mins
Two people walk down the street with shopping bags

Canadian consumers rejoice – U.S. retailer Target opened its first three stores in Canada this week.

These are the first few of many – Target is soft launching a few stores before rapidly expanding across Canada, with 124 stores nationwide by the end of the year. Target’s grand opening a big deal – even Walmart is taking notice. The retailer kingpin has spent millions renovating its store and has lowered its prices on many items.

If you’re never been to a Target before, it’s positioned somewhere between Walmart and the Bay. It’s not every day that a major U.S. retailer opens its doors in Canada. Let’s take a look at the pros and cons for the Canadian economy of the bullseye brand’s grand opening north of the border.

The bright side of the bullseye

The grand opening of Target in Canada is a good news, bad news story.

It signals the end of Canadian retailer giant Zellers – this is especially bad news if you’re a Zellers employee. The good news is that Target took over the majority of Zellers stores – former Zellers employees have an opportunity to apply for jobs under the new banner. When American chains like Target and Lowe’s set up shop here it provides thousands of job opportunities for Canadians.

For example, Target opened a distribution centre in Cornwall, which will provide hundreds of new jobs to the smaller community. Target will be a staple at Canadian malls everywhere – the customers it draws in will in turn help fellow retailers like Dollarama acquire new customers. If you’re a supplier, Target offers a new outlet for your merchandise.

Saying goodbye to a Canadian staple

Let’s face it; Zellers was a tired brand. In fact it was constantly ranked as having the worst customer service in Canada.

When U.S. retailers open in Canada, they bring their tried and true brands and customer service with them. Target isn’t your run-of-the-mill box retailer - it’s well known for its quality apparel, housewares and seasonal merchandise, often referred to as the chic name “Targé” by its many loyal customers. Heck, even teenagers have taken a liking to them! It’s good news for Canadian consumers who have a new line of quality brands to choose from.

Mixing up the Canadian retail landscape

Target’s arrival offers new competition in the Canadian retail industry. With its massive buying power it can afford to compete with the likes of Walmart. Consumers will benefit from a better selection of products at lower prices.

Canadian locations will save U.S. bargain shoppers time and money – you’ll no longer need to fill up a tank of gas, head across the border to a Target in Buffalo and pay duty fees upon return. And, although Target’s headquarters at located in the U.S., by shopping at a Canadian Target you’ll be supporting Canadian jobs.

The downside to American invasion

Target isn’t fully acquiring Zellers; it’s only taking over some of its prime locations. If you’re a Zellers employees this is bad news – not only are you not guaranteed a job, if you do get hired by these new stores, you’ll most likely have to start at a lower wage with fewer hours.

It’s a well-known fact that U.S. retailers like Walmart aren’t a fan of unions – Walmart went as far as to close a couple of its locations in Quebec after they attempted to unionize. While Zellers had a union, Target employees are no longer under the protection of one. This could mean lower wages and less time off for employees.

Prices are far from the bottom dollar

Although Target plans to offer its most sought after products north of the border, it will only price match on certain items.

This is disappointing news, although it doesn’t come as a surprise – Canadian often pay as much as 50% more than Americans due to country pricing, tariffs, higher wages and a lack of economies of scale.

Sean Cooper

Sean Cooper is the author of the new book, Burn Your Mortgage. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Financial Journalist, Speaker and Money Coach, his articles and blogs have been featured in publications such as The Toronto Star, Globe and Mail, Financial Post, Tangerine: Forward Thinking blog and TheDot. You can follow him on Twitter @SeanCooperWrite.

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