Missing the Target: The Rise and Fall of the Canadian Expansion

In 2011, Target announced they would be bringing their stores north of the border. As the second-largest discount retailer in the United States next to Walmart, their well known brand was expected to excel in the Canadian market. To secure their presence, the American company purchased 220 Zellers locations from Hudson’s Bay Co. and planned to open more than 100 stores within one year.

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At first, Canadians were thrilled that one of their favourite U.S. retailers was going to be in their own backyard. But the company's debut was met with a variety of problems from the get-go. One of the most significant was a lack of inventory, leaving many shelves bare. Prices were also an issue, as compared to their stores in the States, costs were significantly higher than their Southern counterparts.

However, many feel the most fatal mistake was the decision to roll out 133 new stores all at once, as just twenty-two months later, Target announced they would be closing every single one in Canada.

Estimated to have lost $2.1 billion in their Canadian venture, Target’s departure was not only a loss to the company, but also to their 17,600 employees and the retail real estate industry. Scott Lee, Principal at Western Canada Northwest Atlantic, was completely shocked by this sudden announcement. After 26 years in the business, he noted that he had never seen anything like it.

Occupying nearly 15 million square feet of retail space and five million square feet of office and industrial warehouse space, landlords and brokers now had big spaces to fill.

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Target spaces that are vacant are highlighted in yellow. Source: Steve Lee

Though the media has reported that Target’s empty stores have plunged the real estate industry into uncertainty, David Morris from Form Retail says this is not the case. Though challenging, the restructuring has mostly been positive, and they are all expected to be reoccupied by 2017. In fact, it reflected the demand in the market for larger retail space.

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