Target's Entry into Canada

The first Target store opened in Target Corporation is operating a retail business that is registered with New York Stock Exchange (NYSE: TGT). The company controls more than 1,700 stores distributed across 49 States in the United States. Target started it main retail business activity back in 1946 when the company founders envisioned a plan to offer quality and fashionable merchandise at discounted rates and a further grant of a 5% of its income to community grant programs like Take Charge of Education aimed at transforming the local society where stores operate (Target, 2011). TGT’s main merchandise strategy is summarized in a slogan, “Expect More. Pay Less”. According to Abacus Data Canadian customers are willing to spend more for merchandise and services from a socially responsible retailer chain like TGT, whose entry into Canada is estimated to increase capital base and revenue.

How Target is prepared for an entry into Canada

TGT is well positioned to exploit the Canadian ethics focused retail market since TGT offers quality products at lower prices and because TGT is rated as a social responsible Corporation through its community grant program (Abacus, 2011). However, TGT is likely to lose consumers who may feel that the retail shop pays little wages to its employees compared to market wages. TGT as a US food retailer is planning to enter the Canadian market by 2013 (Retailing Today, 2011). Already, 61% of the consumers would be “very” or “somewhat” interested in a TGT store, with the highest level of interest shown in Ontario with 71% because TGT provides uniquely differentiated merchandise at lower prices (Financial Post, 2011). TGT, being an upscale discount retailer needs to establish a strategy that focuses on meeting the demands of the consumer market at this level, mainly women in employment, and those in families who make key decisions on what their families consume. TGT’s appeal is brighter in comparison to Wal-Mart because of its focus on ethical issues such as putting 5% of their incomes back to the community, and recycling waste to hold back the negative effects of environmental pollution (Newswire, 2011). Over 40% of Canadians avoid goods they perceive to be procured and produced unethically while 52% of Canadian prefer local products; therefore, since TGT has hired the Canadian Sobeys to supply local groceries (Abacus, 2011).  TGT is likely to use its main strengths in the business market to overcome entry repercussion. TGT offers low discounted prices for its food commodities such as premium meats, chocolate desserts and cooking staples. TGT offers superior quality and excellent location; the foods are also healthy with low trans-fats to attract low calories concerned customers. Further, TGT has diversified her capital base through corporations such as Target. Com, Target Brands, Target Commercial Interiors, Target sourcing services besides the Target stores that distribute the company’s products across the United States and the same is likely to be duplicated across Canada especially Ontario (Marketing Mixx 2011). In addition, TGT space of 95,000 to 135,000 square feet provides enough space for displaying merchandise and aisles for guests to move about from one portion of the store to another (Marketing Mixx, 2011). Competencies such as a qualified customer service made up of 355,000 TGT customer assistants who play a big role in welcoming and welcoming guests and customers (Target, 2011). TGT is a profit making organization with current revenue of $67.390 billion; TGT’s capital base is likely to attract high volumes of Canadians with an average income of $60,000 who are more likely shoppers for TGT merchandise (Marketing Mixx, 2011). That is because the retail chain stores will be retailing the following merchandise: cosmetic and beauty products, jewelry, electronics, groceries supplied by the already established Sobeys, sporting and kitchen equipment. Therefore, TGT is competent financially; stable through acquisition of 150 Zeller stores in order to enter the highly competitive Canadian market (Pett, 2011).          

Target’s future Canadian retail guests and Shopping Trends in Canada

The target market is employed, well educated women in families aged between 35 to 54 years (Financial Post, 2011). The Canadian consumer is willing to pay more for better quality goods than most US consumers would (Statistics Canada, 2007). Canadians spend an estimated $10 USD extra on perceived ethical shopping as opposed to U.S. guests (Canadian Bacon, 2010). The Canadian shopper spends more on retail goods than the average American shopper. Families have the biggest disposable incomes of up to 100,000 USD, and the women these relationships have the greatest control over the families retail budget (Statistics, 2008). According to the statistics also, unattached individuals are getting a higher income each year and the average for women now stands at over 33,000 USD for females of between 16 and 64 years. Statistics indicate that women with a degree also earn about 62,800 USD and are a huge segment of the women’s consumer market.  With the increase in female population entering the senior age, the company should seriously consider the needs of the aging population.

TGT’s acquisition of Zeller’s chain of stores in Canada is expected to provide a market base opportunity of 150 stores that would facilitate penetration into the Canadian market. Canadian after tax incomes are on the rise (Statistics Canada, 2007).  According to Brand Channel, American brands have a good reputation internationally, and especially in Canada, where most of the popular brands are American (2001). The Canadian retail sales are increasing at a considerable rate since 2009, an opportunity that TGT would exploit greatly (Statistics, 2011). The brand can target the emerging Canadian consumer markets such as Muslims whose proportion of the migrant population is over 50% of the total (Market Mirror, 2010). TGT’s product quality is rated above Wal-Mart’s quality rating only that the latter is cheaper than the former but for the Canadian population, TGT top quality priority is likely to attract a big customer base. TGT’s merchandise differentiation and marketing policy allowing private labeled products to be stocked and sold in TGT stores, the move is expected to increase sales since private merchandise is focused to satisfy customer needs. 

Similarities and Differences between U.S. and Canada national brands sold by TGT 

Top world brands include Coca-Cola, Microsoft, IBM, General Electric, Intel and Nokia (Swystun, 2011). Most of major categories in both the US and Canadian markets tend to overlap, and the competition is expected to get stiffer (Pett, 2011). The groceries and retail industry remain highly competitive with little differences between U.S. and Canadian brands. TGT runs a prominent fashion line featuring many big names in the fashion industry, which might help it greatly in penetrating the Canadian markets. The firm is also already popular in the market, in some areas as much as 95% of the population have heard about TGT brands in the private label category. Fashion collection retailer will provide exclusive Gwen Stefani collection, Justin Timberlake collection, John Derian collection among others that are likely to be duplicated in Canada since there buyer trends remain similar (Internet Retailer, 2010). The company is clearly seeking to focus on apparel and accessories, and Sobeys is going to supply it with these materials.

The differences between the U.S. and Canadian guests

The disposable incomes of both the Canadians and US citizens are almost at par (Baldwin, 2008). Married women in Canada have control to disposable incomes of up to 100,000 USD, and are the main focus for the upscale retailer (Internet Retailer, 2010). According to the Target boss the company’s expansion plan is going to focus on women buyers in families (The Global Mail, 2011).

Media Channels that TGT can exploit to Communicate to Canadian guests

According to a recently conducted poll, Canadians rank first in the use of internet and social media (Online Marketing Trends, 2011). According to 2011 statistics, 71.9% of Canadian population are frequent internet users when compared 67.35% of U.S. population; therefore, TGT should exploit internet and social media channels to get more consumers. Since TV and web constitute 15.5% and 13.15% of time spent by Canadians weekly, then TGT can use TV and web. TGH can make use of Target.com to communicate to over 17.6 million Canadian of which 83.1% use Facebook and 13.7 % use Twitter (Online Marketing Trends, 2011). The average total income for lone females, married couples and men lone parents has drastically increased to allow most Canadian guests to look out not for price alone but quality of products. Men with education earn more than $62,600 while graduate women earn $44,700 dollars (Cara, 2010); thus, most Candian consumers have funds to spend regardless of economic inflation in the world.  

Will TGT’s U.S. promotional strategies appeal to English and French Canadians?   

French speaking Canadians like to see their merchandise addressed in a language they best understand. Unlike in the U.S. where English is the main language, Canadian French speakers require modest and appealing promotion (Cyborlink, 2011). Most of Canada is English speaking but even the French speaking Quebec prefer to have material both in French and English (Cyborlink, 2011). Canadians are very conscious about their health, something TGT should factor in the promotion of their products (Health Council, 2011). TGT intends to introduce new private labels that would attract both French and English speaking Canadians (Hall, 2011).

Target’s primary competitors in Canadian and Strategies to benchmark competition        

The major brands in Canada in the food industry are Wal-Mart and McDonalds (Retailing Today, 2011).  TGT should aim to join in the list of top ten brands in the Canadian market.

7. What economic factors influence the purchase behavior of Canadian guests- now and future?

Canadian guests have been shown to put significant level of importance on the ethical aspect of the products sold to them, and are willing to pay extra for ethically produced products (Abacus, 2010). Canadians rely on over a half a trillion dollars foreign direct investment (CIA, 2011). TGT major weakness is Wal-Mart that is offering discounted products, which will require a different marketing strategy for the retail store to penetrate the Canadian market (Hall, 2011). TGT should double up its public relations in Canada to avoid instances like when guests complained over poor customer service during the purchase of the world famous designer exclusive collection at TGT (D’Innocenzio, 2011). A lawsuit against TGT has been filed by a business affiliate and Canadian firm using Target Apparel name over the use of the name Target; the court’s decision I anticipated to affect TGT entry into Canada (Strauss, 2011).  and a recent crush of Target.com website that handles direct online inquiries and sales have dented TGT’s reputation ahead of its entry into the Canadian market (Pett, 2011). Some customers have complained that TGT store advertises sold out brands while some products are over-dated to escape quality scrutiny; therefore, Wal-Mart is likely to overshadow TGT’s entry into Canada because Wal-Mart offers quality discounted products unless TGT starts to stock all viable quality products.  To counter constraints, TGT effective presentation and assortments whereby complementary items merchandise are put near each (Hauss, 2010). Equally, the shopping environment is quite quiet that it pricks to shop alone in the huge stores; therefore, TGT Corporation should play refreshing music or include a good sort of entertainment that promotes customer spirits. The efforts by Wal-Mart to consolidate its market presence in reaction to news of TGT’s plans may be a major threat in the next few years (Retailing Today, 2011). The low priced quality products that TGT offers are equally offered by K-Mart and Wal-Mart promoting high competition in the retail industry. The high expenditure rate expected with Canadian French and Asian customers is likely to dwindle if the rate of inflation is continues to escalate in America. Lastly, TGT has lost many lawsuits because of poor marketing plan and policy that overlooks negligence creating loopholes for torts such as poor wages and poor working conditions on part of its workers. Change is expected if TGT adopts ethical sale avenues that include counting on the Muslim Canadian community to buy merchandise if advertised using Islamic business appeal language and tactics. 

Conclusion

In conclusion, TGT Corporation is projected to make quicker market returns by investing in Canada because of the favorable investing conditions and promising consumer base in Canada especially among the French and Asian Canadians. TGT’s revenue will double up if the retail corporation promotes quality and low prices in accordance with their policy of “Expect More, Pay Less”.