Go to the Globe and Mail homepage

Jump to main navigationJump to main content

 

 

ROB magazine

Why Canadians are paying more at Target Add to ...

I thought it was the other way around.
No. Americans have a little bit more of a bitter palate. And so one of the things that we’ve learned through food is that we have to be very thoughtful in how we think about even things like our own branded food formulations.

What else can you tell me about the process? What would you have done differently knowing what you know now?
Our biggest focus has been our team, making sure that we hire the right team and ensuring that our team remains our biggest competitive advantage. I would have even started earlier, if I look back, you know. We could have hired people very early [17], and it was quite a process to get people through the formal part of the interview, the offer process, the notification. And we’ve had some very generous competitors from a talent-donation standpoint, so I want to thank them publicly.

Canadian Tire and Walmart, Sears, TheBay.
Every one of them.

And how many Zellers employees?
We have quite a few Zellers employees. I don’t have the specific numbers because it changes by the minute. We have Zellers employees here at headquarters, we have Zellers employees in our district offices, we have Zellers employees [18] leading stores for us.

About what percentage of Zellers employees were hired?
I don’t know the percentage, and I don’t think we would talk to that publicly, because I think that it will constantly be changing. But I can tell you that at all levels in this organization we have people from Zellers, from Hudson’s Bay Co. and from every one of our retail peers out there.

What will be different in Target’s Canadian stores?
People are so concerned about Target Canada Lite, but I actually think of it as Target U.S. Plus. Because every new fixture we’re investing in our stores in the U.S., we’re getting them across the entire chain in Canada in year one. For example, white gondolas versus the old almond colour gondola. White gondolas19 look so much cleaner, look so much fresher, they look brighter and the products stand out as a star. That might seem like a simple change, but for somebody like me, that just lights up the store. So, new fixtures, new checkout lanes, new signing package,new guest navigation. We’re going to have them in every store in Canada.

What else struck you as being quite different here than in the United States?
For example, the flyer—what we call the circular in the U.S.—is going to be our primary vehicle to communicate weekly specials to the Canadian consumer. And that’s also our primary vehicle in the U.S. The big difference here is—and this is actually a major difference—that the flyer prices run from Friday to Thursday; in the U.S., it’s Sunday to Saturday. Our fiscal weeks are still going to be Sunday to Saturday, but our ad weeks are going to be Friday to Thursday. That’s odd for us to manage, but we have to make sure that we’re consistent with the Canadian marketplace.

Analysts who follow Target say that the margins in Canada could be up to two points higher than in the U.S. It’s just under 10% in the States, and they’re expecting that in five years or so,they’ll be closer to 12% here. What will help improve margins throughout Canada?
I’ll tell you what will help improve our margins: We looked at 276 Zellers locations from the Hudson’s Bay Co., and we structured the deal [20] so we could take up to 220 of those locations. And of those 220 locations, we selected a handful of them and sold some off to our competitors. So what we’re left with is the best of the best locations that are going to generate returns that are higher than what we get on an average store in the U.S.

And so when you look at what we expect to deliver long-term, we’ve talked about $6 billion in sales and 80 cents earnings per share [21] from Canada. It’s a very healthy business model for Target, and it’s because our locations are some of the best locations in the entire country.

The analysts say higher prices will help also.
Well, we’ll see on that.

You feel it’s the locations?
I feel it’s the locations. Our biggest benefit from aprofit-building [22] standpoint, and it returns back to the overall corporation, is the fact that we picked the best of the best locations—locations like the Square One mall in Mississauga. Holy cow, I mean,you can’t even find a parking spot there sometimes. The mall’s huge, and it’s right next to a GO train station, so the traffic coming through [23] there is unbelievable. That location is phenomenal.

Single page

Follow on Twitter: @MarinaStrauss

In the know

Most popular videos »

Highlights

More from The Globe and Mail

Most popular