U.S. retailers get cold shoulder in Canada
For years, Canadians would cross the border to the United States to shop at Target. So the decision to export its cheap chic there seemed like a no-brainer.
But a year since opening more than 100 stores north of the border, Target has found business isn't so easy.
Shelves are hard to keep stocked. Shoppers complain the prices are higher than at American stores. Sales have been weak, and the retailer lost nearly a billion dollars in Canada for the year.
Cracking the Canadian retail market, about one-tenth the size of the United States', looks simple.
But Target's difficulties expose the challenges of doing business in Canada that have bedeviled other retailers. Some of the problems are old, like the web of costly regulations. But there are new ones, such as a slower Canadian economy and increasing competition that's making the retail landscape look a lot like the U.S. economy.
The troubles are not what stores expected just a few years ago during the depths of the recession, when they saw Canada as a risk-free way of expanding internationally and re-energizing sales growth.
Now, Target is increasing marketing to convey it has unbeatable prices, while trying to make sure it has the right merchandise at the right time.
“I think there was an assumption that Target would come in and be everybody's favorite store, but that hasn't happened,” said Antony Karabus, president of Hilco Retail Consulting, who is based in Toronto.
Target has to fight hard to win over Canadians like Melanie Randall, a Toronto resident who crosses the border four times a year to Buffalo, N.Y., for shopping sprees at the store.
As for the Canadian Target stores, “It's not the same,” said Randall, 42, who was recently browsing in Target in Toronto's East York Town Centre.
Target's tough time in Canada isn't unique.
Big Lots Inc. is closing its 78 Canadian stores, which it bought just two years ago. Best Buy announced last year it was closing 15 of its 260 stores in Canada.
Even Wal-Mart Stores Inc., which has been entrenched in Canada for more than two decades, says sales have faltered.
U.S. retailers tend to underestimate the much different employee benefit laws and other rules, including language regulations. All product packaging must be in English and French. In Quebec, stores are required to make French more prominent in marketing and signs.
Canadian shoppers are under financial pressures. The Canadian dollar has weakened, forcing retailers to charge higher prices. Because 90 percent of Canadians live within an hour's drive of the United States, they are used to crossing the border to compare deals, according to Diane Brisebois, president and CEO of Retail Council of Canada.
Competition is heating up, particularly in discount retailing. Homegrown Canadian standbys like Dollarama and Canadian Tire are formidable rivals.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Stocks end tumultuous week on down note
- U.S. employers add 223K jobs, jobless rate falls to 5.3%
- Gulf states reach $18.7B settlement with BP over oil spill
- H-D Advanced Manufacturing in Franklin Park buys aerospace components maker Firstmark
- Kraft shareholders approve merger with Heinz
- Halliburton to close Indiana County office
- Government contests sale of GE appliance business to competitor Electrolux
- Alpha Natural Resources buys out European partner in Marcellus venture
- Heinz executives to dominate post-merger management of Kraft Heinz Co.
- SEC votes to expand clawbacks of executive bonuses
- Data transfer in mergers tall task for chief information officer for Peoples Gas