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Target’s Canadian Entry Could Affect Other US Retailers There

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Wal-Mart Stores Inc.’s (WMT) Canadian operation stands to take the biggest hit when Target Corp. (TGT) arrives in the country, a new consumer survey says.

Some 57 per cent of consumers who frequently shop at Wal-Mart Canada say they would visit the stores less once Target becomes a presence. Some 44 per cent of Sears Canada Inc.’s (SCC.T) frequent shoppers said they would cut visits, and 16 per cent of Costco Wholesale Corp.’s (COST) customers indicated they would do some curtailing of trips in favor of going to Target.

The reason has a bit to do with curiosity–Canadians want to see what Target brings to the table. But the survey, by retail consulting firm Satov, also indicates that Canadians feel Target will fill a need for inexpensive, fashionable apparel. Target may also be able to offer more competitive pricing on national and private-label brands and to provide greater breadth than competitors, Canadians are hoping.

The survey of 600 Canadians comes as Target is gearing up to enter Canada in 2013. The retailer set the groundwork early this year through a more than $1.8 billion deal with Hudson’s Bay Co. to buy the rights to 220 Zellers store leases. A month and a half ago, Target announced the first 105 proposed store leases it would take over from Zellers. And two weeks ago, Wal-Mart agreed to acquire leases for up to 39 Zellers stores that Target held the rights to.

While Canadians’ willingness to shift at least some of their business to Target from their current retailers is notable, there are other factors involved, said Mark Satov, head of the consulting firm that conducted the survey.

The Zellers stores are smaller than the typical Target big box, which will affect the type and quantity of merchandise Target can offer, Satov said.

Target also has to live up to Canadian customers’ expectations to build loyalty, he said. “Shoppers are looking for something new and to fill certain gaps. There will be a trial period.”

Source : Wall Street Journal

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