Target Confirms 125-135 Store Expansion in Canada

Minneapolis–Target confirmed Friday that it completed its lease deal with Zellers Inc., the Canadian retailer, and plans to open 125 to 135 stores in Canada beginning in 2013.

For its first move outside U.S. soil, Target agreed to a $1.8 billion purchase for 105 Zellers store locations in January. Now Target has added 84 more locations, including 29 lease hold interests for 29 locations, which are slated to open as Target stores in 2013.

Zellers, a division of Hudson Bay Co., also transferred 39 lease locations to Walmart, which already operates some 300 stores in Canada.

Target is among a growing list of U.S. based retailers which has looked northward for expansion. Others include J. Crew, Express, TJX Companies, and Gap Inc. Nordstrom and Kohl’s both have been rumored to be interested in Canadian locations.

Canada: ‘One of the Most Competitive Markets’

“The U.S. market is largely tapped out in terms of expansion opportunity and consumer demand has softened,” said Madison Riley, managing director at retail consulting firm Kurt Salmon. “At the same time, the Canadian economy did not suffer as much as ours and there are virtually no regulatory hurdles.”

But David Cheesewright, Walmart Canada’s ceo, told Reuters last week that although consumer confidence in Canada didn’t sink as much as it did in 2008 in the United States, confidence isn’t improving and his consumers are continuing to look for low prices.

“It’s tough but stable, and people are looking for value,” Cheesewright said. “That hasn’t changed much over the last 18 months, and I’m not sure I see it changing much over the foreseeable future.”

When asked what its approach will be to seeing its No. 2 competitor in the United States enter Canada, Cheesewright said that other than sprucing up stores in direct competition to new Target locations, there’s no major plans (or worries) about Target’s expansion.

“The Canadian market is incredibly competitive anyway. I’ve worked in Europe, I have a lot of experience in the U.S., and it’s one of the most competitive markets I’ve seen,” added Cheesewright.

 

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