Francine Kopun – Business Reporter
Published On Mon May 7 2012
Target won’t arrive for another 10 months, but 61 per cent of Canadians surveyed plan to shop there, according to market research released Monday.
Among cross-border shoppers who have visited a Target store in the U.S. in the past year the figure is even higher – 90 per cent, suggesting that familiarity with Target breeds contented customers.
The survey of 1,500 Canadian shoppers was conducted in February and March of 2012 by KubasPrimedia, a firm specializing in retail analysis.
To compare, 50 per cent of Canadians expressed an interest in shopping at Walmart when it crossed the border in 1994, said Ed Strapagiel, executive vice-president of KubasPrimedia
Strapagiel said Target has done a great public relations job so far, especially with the Toronto pop-up store in February featuring limited edition fashions by Jason Wu, who designed Michelle Obama’s gown for the inauguration night festivities after her husband’s election.
Target also donated the equivalent of 100 per cent of the sales to United Way Toronto.
Strapagiel says Canadians are ready for something new.
“Walmart is basically a price play. Target is a bit more than that. It’s unique merchandise, more fashion forward, better presentations. Zellers has fallen so far out of favour with the Canadian consumer they’re probably quite pleased to have it replaced by something like Target.”
The research also showed that among experienced Target shoppers, 70 per cent think the retailer will draw sales from other general merchandisers including Sears and Walmart.
Respondents also put The Bay, Winners, Toys R Us and Canadian Tire among the top 10 retailers in Canada most likely to be negatively affected by Target.
“Target is very stylish and they’re going to do quite well. They’re going to hurt some people here. I think Sears in particular is going to get it. They’re going to hurt the most, but everybody will,” said marketing expert Rick Padulo, author of I Can Get It For You Retail.
Padulo was the man behind the famous Zellers slogan: The Lowest Price is the Law.
Target Canada Co. has also entered into an agreement with Sobeys Inc. for a long-term wholesale distribution arrangement that will see Sobeys supply Target stores in Canada with food and groceries, including frozen, dairy and dry groceries and Target private label brands.
Rob Gerlsbeck, editor of Canadian Grocer, said he expects Target will meet with more success than Zellers did when it comes to selling groceries.
“Zellers has ceased to be a really good retailer in this country. The parking lots are empty. Target parking lots are not going to be empty; they’re going to be full. The difference is, you’re having a mediocre retailer replaced by a very good retailer. Both of them sell food but one of them – in this case Target – is going to get foot traffic.”
Loblaws is currently Canada’s biggest grocer.
Strapagiel said that even if the number of shoppers who defect to Target isn’t huge, it will have an impact on existing general merchandise retailers because margins in department store sales are slim.
Retailers with a more distinctive position in the marketplace like Costco and Ikea, are expected to hold up better against Target, according to the report.
Home décor stores including Bouclair, HomeSense and Stokes are also fashion retailers likely to be affected, according to Strapagiel.
“These are fashion retailers too, just simply not in apparel,” said Strapagiel.
The figures are statistically accurate to plus or minutes 2.5 per cent, 19 times out of 20, according to the firm.