Target talk turns to prices and opening early

1/23/2013

U.S. discount chain Target may open a store in Guelph, Ont. earlier than expected.

Employees at the Stone Road location say they were informed the store will likely open its doors in February to test systems and gauge staff readiness, according to The Record. Target has previously said its first Canadian stores will open in March.

Company spokesperson Lisa Gibson would not confirm the report, but acknowledged the store has been designated a “training store.”

The company recently posted a photo inside its shiny, red-and-white Guelph store on it Facebook page (below).


In other Target news, a media report suggests the retailer will face criticism from its customers over price differences between its Canadian and U.S. stores.

The article, which appeared in The Globe and Mail’s Saturday paper, cited a study that showed Walmart’s prices in this country “on a basket of commonly used household and beauty goods are almost 23 per cent higher” than in the U.S.

Given that Target and Walmart are almost at price parity in the U.S., the writers argue consumers can expect similar price hikes on Target products.

In the Globe’s article, CEO Tony Fisher is quoted as saying “we’ve built our business model to be incredibly competitive with the lowest-priced leaders in Canada. We’re not building our business model as compared to the U.S.”

With all the hype, Canadian Grocer decided to bring in an expert, Robin Sherk, director of market insights at Kantar Retail.



Why are there such noticeable price differences between Canada and the U.S.?

There are all sorts of reasons: different regulations, different tariffs. Some of it is different costs of shipping things around – Canada is a massive country. Some of it is the cost of producing the goods. You have to make separate, bilingual packages.

If prices are indeed higher, what will stop Canadian consumers from continuing to cross the border to shop at Target?



I think that involves what types of things you’re buying at Target. Roughly 40 per cent of what they sell is consumables (non-edible grocery, edible grocery, or HBC). So when you cross the border to go shopping at Target, you’re probably thinking of buying those destination items: apparel, home-items, those interesting things you can just get at Target. So I think with those items, people probably will compare to the U.S. and say ‘Hey, if I can get this cool designer shirt for 20 per cent less if I drive over the border, then maybe I’ll just go over there.’” But if you’re talking about something like toilet paper or toothpaste, you’re more likely to compare that to the Walmart down the street.

How will Target position themselves, if their prices aren't as low as they are in the U.S.?


I think what Target wants to do is make sure they offer customers value. They can offer those neat items like designer collections or simply the experience of their shiny stores. If they can offer shoppers something they can appreciate, and they feel they’re getting a good deal for what they’re spending, then they’ve succeeded.

Do you think Target will do anything interesting with Canadian stores’ format that will help distinguish them?



They’re definitely spending a lot more time remodeling their stores than Walmart did. So are their stores going to look a lot better or a lot nicer? I would expect so. Target is a master marketer. They know how to excite people, they know how to create that anticipation and I think they are already doing that.

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