Target eyes distribution centres in Canada

Target Corp. is building three distribution centres as well as firming up its strategy for fresh food at some locations all in preparation for its entry into Canada.

Target’s move into grocery will put an already competitive market under more pressure and the Minneapolis-based retailer is expected to steal away some of the $111.8-million grocery business from incumbents, according to some experts.

The company will set up its own distribution network for its Canadian locations in Toronto, Calgary and Vancouver, rather than rely on its U.S. warehouses.

Target isn’t known for its food, and hasn’t talked about its strategy for its Canadian locations, but later this month the retailer will show its new concept outlet in Chicago to Canadian journalists. The store is a good example of what can be expected from Target in Canada, with a limited choice of fruit, vegetables and meat.

At its SuperTarget stores, the retailer carries a full selection of fresh food, and last year it started promoting its p-fresh (prototype fresh) model featuring a scaled downed offering of fresh foods for its more conventional sized stores.
It’s estimated that some 40 per cent of merchandise in p-fresh stores will be the same ones found in Canadian grocery stores, including food, packaged goods and drugstore items. Based on this, it’s believed Target could take $1.5-billion to $2.5-billion of grocers’ business.

Following its $1.8-billion deal this year to buy Zellers stores from Hudson’s Bay Co., Target is set to open as many as 150 stores here by 2013. The U.S. chain has set its sights on launching 200-plus outlets, with $6-billion in annual sales by 2017.