Target Corporation's Business Expansion in Canada

TARGET CORPORATION & WAL-MART STORES, INC.

Canadian Expansion

Target Vs. Wal-Mart

Frank Colwell

April 10, 2013

BMGT 481W

Section: 3284

Canadian Expansion

Target Corporation and Wal-Mart Stores, Inc. have made many interesting corporate decisions since their doors opened in 1962. Seeing that both companies have adopted business models centered on providing low cost goods, they have often engaged in fierce competition. Generally, Target’s strategy has been engaging Wal-Mart in a price-dropping tit-for-tat. However, Target has recently announced their plan to open 125 stores in Canada and this time Wal-Mart is following suit.

Target’s decision to penetrate the Canadian market came about after the company agreed to purchase $1.8 billion in leasehold interests from the Canadian retailor Zellers. The leaseholds enabled Target to acquire over 220 locations across Canada. Of the 220 locations Target will open 125 stores and sell the rest to other retailers (Blackwell & Bertrand, 2013). Many are wondering how Target will perform against Wal-Mart in Canada. Zellers Inc., the company from which Target acquired leases, was doomed from the start upon Wal-Mart Canada’s arrival in 1994. The downfall can be attributed to Wal-Mart’s deep pockets, non-union culture, and ultra-low prices. Nevertheless, Target feels they are very well prepared to compete against Wal-Mart. Gregg Steinhafel, Target's chief executive has made this statement with respect to competing with Wal-Mart, “‘We will match item by item on price with Wal-Mart, we offer a superior value proposition, as a high-quality merchant with a more unique assortment that [also] competes with specialty stores’” (Shaw, 2011).

In response to Target’s Canadian infiltration, Wal-Mart Canada has announced it will spend $450-million expanding its operations this year. The money will be spent opening 37 new “‘super centre’” stores, as well as on renovations to current stores...