Target closure rocks Canadian retail market

When U.S.-based retailer Target announced last week it was closing all of its 133 stores in Canada, it shocked the country's entire retail industry, and its pricing strategy is a leading contributor to its failure, experts said.

Facing 2 billion CAD (1.64 billion U.S. dollars) in losses since its Canadian expansion less than two years ago, the retailer said last Thursday it was liquidating its Canadian inventory and putting more than 17,000 Canadians out of work. Experts said Target failed to replicate in Canada what makes it successful in the United States.

Lindsay Meredith, marketing expert at Simon Fraser University, said that Target Canada missed its target for quite a few reasons. "The biggest one of course is they didn't do their homework about Canada."

"To figure out how to sell to Canadians, all they had to do is look at Target U.S. and figure out why all those Canadians liked to drive down to Target U.S. to do their shopping, emulate the whole product, process here, you would have been home free," Meredith told Xinhua in an interview on Tuesday.

The retailer's U.S. chains have provided unique brands in low prices, but Canadian shoppers have complained that their Target stores had much fewer brands and the commodities there were much more expensive than those in the Target U.S..

"The main factor will probably be the price difference," said John Lomandes, a Target shopper, noting that Canadians were expecting the same low pricing in stores of Target Canada as their U.S. counterparts.

Target's Canadian subsidiary has filed for court creditor protection during the liquidation of its operations, and said it would put 70 million CAD (57 million dollars) into a special trust for employee severance payments as part of the process.

Not only will roughly 17,000 Canadians be thrown out of work when Target stores across Canada were shut, but a vast array of valuable retail space would fall dormant as well.

Retail real estate expert Kirk Keuster, managing director of Colliers International, told Xinhua on Tuesday the Target pull-out was among the biggest he had seen, but other large retailers in Canada such as Wal-Mart, Canadian Tire and Costco would likely move into much of the real estate left empty by Target.

Prime big-city locations would be the first to attract new tenants, but the empty spaces in smaller cities may be difficult to fill, he added.

The best-located stores will find themselves alternate tenants in very short time but the rest might find it more challenging to do so, Keuster said.

It is believed that the falling Canadian dollar and rising personal debt levels will likely encourage Canadians to spend less while the rise in price of goods might put even more pressure on the Canadian retail sector. Endi