Will Walmart Head Off Target in Canada?

Jan 25, 2013

This isn’t the first story we’ve done about Walmart looking to blunt Target’s momentum as it rolls into Canada this year. Back in July of last year, Walmart Canada announced it was lowering prices on 10,000 products, the biggest rollback in the company’s history in that country. It also announced a major remodeling and store opening program.

This week, Walmart Canada announced it would spend $450 million (C) to finish conversions or remodels on 37 supercenters as well as open nine more stores by the end of January 2014. A year from now Walmart Canada will have 388 stores while Target will have somewhere between 110 and 135.

"Our associates across the country have done an incredible job this past year serving our customers and opening a record number of new stores and supercentres," said Shelley Broader, president and CEO of Walmart Canada, in a press release. "This year, we are ramping up our focus on lowering prices and helping customers lower their cost of living, as we continue to bring our supercentre format to more Canadians."

Ms. Broader told The Globe and Mail that Walmart would focus on providing a one-stop shopping destination for Canadians. She said rather than focus on what Target does, Walmart would continue to emphasize its ability to help its customers save money.

"Any time you are in a marketplace where you are dealing with the exit of a comparatively weak competitor in Zellers, and the subsequent entry of a competitor that is world renowned for merchandising, great marketing alliances and product development, any prudent retailer would be concerned about that," Doug Stephens, president of Retail Prophet Consulting, told The Globe and Mail.

Meanwhile, Target announced that it would carry the Roots Outfitters Collection in its Canadian stores from March to June. Prices will range from $7.99 to $34.99 on the line.

"As we open our doors, I think our clean store environment and distraction-free shopping experience is really important. Certainly, the collaborations and those kinds of things that we do on that front really are a great value," Mr. Morioka, senior vice-president of merchandising at Target Canada, told the Times Colonist.

"So, it is about price, but it’s also about value, and we’ll bring that to Canada. And as we learn more, we’ll have to make adjustments as we learn how Canadian guests shop our stores," he added.

How much more or less of a competitive threat to Walmart is Target in Canada vs. in the U.S.? Do you see how the chains approach their rivalry changing in any way up north?

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11 Comments on "Will Walmart Head Off Target in Canada?"

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Camille P. Schuster, PhD.

So far, Walmart and Target are using different strategies for different groups of consumers. If both companies have done their homework and groups of consumers exist, then both companies will do well.

Ryan Mathews

They are going after two discrete sets of customers. If they remember that, they’ll both be fine. If they forget that, they’ll both waste a lot of money.

Ron Margulis

This is a category-by-category game. The areas of the stores where there will be heated competition include grocery and home goods, and it will be a bit of a slugfest on prices and assortment that should benefit the Canadian shopper.

I see two different types of customers shopping Walmart and Target in Canada for fashion, accessories, bedding and jewelry. In these areas, Walmart will compete for shoppers with the likes of Canadian Tire, while the Target shopper will go to Loblaw’s Real Canadian Superstore or even The Bay.

David Livingston
4 years 4 months ago

Target is going to be challenged in Canada. Lack of name recognition and sub par locations which are small compared to Walmart. Walmart has been in Canada for over 20 years, has good locations, and is significantly larger than the failed Zeller’s sites Target is taking over. Keep in mind, it’s not like Walmart is getting more competition. Target is simply replacing Zeller’s. As Target navigates through the learning curve, I’d hope they would do better than Zellers but Walmart might not even notice the change.

In the USA, Target continues to lag behind Walmart in store unit volume and sales per square foot, particularly in grocery. Walmart will routinely do over a $100 million per year in a supercenter. How many Targets do that kind of volume? I can’t think of any and would love to have someone point one out.

gordon arnold

I am not so sure that Walmart is concerned with name plates as they are with market share and profit stability.

I have attended several board of director and executive committee meetings for different large public and private corporations to provide information support and plan presentation. Mentioning a competitor’s name by any attendee was frowned upon with immediate redirection mandated. In a weak or sputtering economy, the ability to expand product, service and store locations will increase likeliness of survival. Any company that can afford to do so should observe and mimic the ones that successfully do on any scale.

Gene Hoffman
Gene Hoffman
4 years 4 months ago

East is east and west is west—and why should the twain meet in Canada?

Walmart has its customer targets and so does a more selective and lower volume Target, but they are different audiences. Both companies need to remember that they both can grow in Canada and not waste lots of $$$ competing for the other guy’s audience.

Matt Lincoln
Matt Lincoln
4 years 4 months ago

We are moving to the era of “me” retail. The consumer will be winning increasingly more every year. Walmart should gain market share and knock off smaller threats. However, larger threats such as Target will fight for the consumer with their market share staying flat unless they make major moves like Walmart.

Craig Sundstrom

The stereotype of Canadians is that they’re cheap and dull—hey it’s not MY opinion, and I’m not claiming it’s true—so by that logic ,WM will knock Target out of the rink (as it were). But I doubt that’s true (if it were, Nordstrom wouldn’t be opening stores there); I expect we’ll see the same play up north…just on a smaller stage and with more snow.

Anne Bieler
Anne Bieler
4 years 4 months ago

Target will be another serious competitor for Walmart in several categories. The Canadian market has been a challenge for Walmart and it has taken them time to adapt. Sam’s club closed after 5 years in Toronto market—Costco strongly entrenched. Walmart Canada has been working to erode Loblaws predominant position in food, but still ranks behind Sobey’s, Metro, Canada Safeway.

With just 35 million consumers, the marketplace is small, has a very diverse demographic, and higher expenses. Geographically the Canadian market is also fairly small, with its population clustered in major urban centers.

Canadians are value shoppers, and they have a choice of food retailers nearby in most cities, but assortments are limited. Target can challenge Walmart in a number of categories by bringing new options and interesting product choices for Canadian shoppers.

Shilpa Rao

Walmart has taken several steps after Target’s announcement of launching in Canada—expanded lines included fresh, localized assortments based on demography and of course the roll backs.

Personally, I feel Walmart in Canada has a better variety than that in the US. In Canada with over 300 stores and many stores in remote and difficult to access areas, Walmart has built a great supply chain network. All this is a sure competitive threat to Target.

Target on other hand is still a new entrant and in a terrain like Canada, would have to learn a lot to get its basics right. So it will take some time for Target to become a big competitive threat to Walmart

Alexander Rink
4 years 3 months ago
Target and Walmart will most likely change the way they approach their rivalry in Canada, as Canadian shopping habits tend to differ from American Shopping habits. An easy mistake to make when entering the Canadian Market is that the same types of strategies will continue to work across the border. However, studies have found significant differences in the ways Canadians shop. For example, Canadians tend to be more cautious and slower adopters of new technologies. They also tend to spend less on clothes, and care less about designer labels than their neighbours to the south. They are also slower on the uptake of private label brands. These are all areas which affect both Walmart and Target’s businesses and consequently, their strategies will have to be adapted accordingly. Target Canada will also need to come to terms that it is also competing with its own US counterpart (Target US), something that Walmart most likely has already learned. For example, the Walmart in Ogdensburg, NY is only about 45 minutes away from Ottawa, Ontario, and many Canadians will admit to making a weekend trip to enjoy the lower prices at the American location. With 90% of Canadians living within 160 km of… Read more »

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