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‘We’re going to have to earn every dollar of sales we get,’ says Harry Taylor, chief operating officer at Mark’s Work Wearhouse.Tim Fraser/The Globe and Mail

Retailers and malls are dressing up their operations as they brace for the Target onslaught.

The impending arrival of U.S. discounter Target Corp. promises to shake up – or bruise – Canadian retailers, and they're taking steps to rise to the occasion. They're investing millions of dollars in marketing, renovations, new stores and banners as well as updated fashion and home decor lines, areas where Target shines.

A case in point is Upper Canada Mall. Five years ago, it struggled with weak department-store anchors. Today it's being transformed as Target prepares to replace Zellers in March while other retailers, including the Bay and Sears, raise their games.

The Newmarket, Ont., mall now is reinventing its image with a new marketing campaign – and next month its own fashion magazine – to trumpet its aim of raising its style quotient. It's sprucing up its property, adding 10-per-cent more maintenance and service staff and even outfitting the latter with silk tie blouses and dress pants from clothier Banana Republic and faux pearl and gold necklaces from Forever 21, instead of the previous generic golf shirts and slacks.

"Target will bring a different experience," said Robert Horst, general manager of Upper Canada.

"That elevates everyone's game ... Certainly the brand and the shopping experience outside of the Target store needs to be that much better."

The last time that the retail sector felt such a big jolt was in 1994 when U.S.-based Wal-Mart Stores Inc. first entered the market by buying Woolco stores and converting them. Since then, domestic players have felt the heat of rising foreign competition. But as Target's arrival next March comes closer following the retailer's takeover of most Zellers stores, it will mean the sudden emergence of a savvy new rival that could rapidly leave some current players in the dust.

"Bottom line is: It's a formidable competitor coming to Canada," Dean McCann, chief financial officer at Canadian Tire, told a conference earlier this month, where he initially referred to Target as the "T word."

"Target is a great retailer and Canadian Tire would never underestimate our competition."

Retailers' landlords also aren't underestimating the Target factor.

The merchant is expected to generate as much as 200– to 300-per-cent more sales-per-square-foot than Zellers, whose estimated average is about $150, said Edward Sonshine, chief executive officer of RioCan Real Estate Investment Trust.

Target will undoubtedly steal sales from others. Sears Canada Inc. and Wal-Mart Canada Corp. could be hurt the most by Target opening in Canada, while other clothing and home decor stores, including Winners, Toys R Us and Canadian Tire, will also lose business, predicted a study last spring by market researcher Kubas Primedia.

Harry Taylor, chief operating officer at Canadian Tire-owned Mark's Work Wearhouse, said 2013 "is going to be a tough competitive year … We're going to have to earn every dollar of sales we get."

While Target is a piece of the competitive landscape, Mark's faces other rivals as well as a rocky economy, he said, adding that the apparel chain was already undergoing its re-branding in its shift to more casual wear from solely industrial clothing even before Target set out its Canadian plans.

In 2012, Mr. Taylor boosted Mark's marketing spending "in the mid-single digits" from 2011 in a bid to raise awareness of its new, more fashionable offerings, including for women.

Sears overlaps with Target in about 70 per cent of its categories, including fashions and home goods, said chief executive officer Calvin McDonald. But it's also concentrating on "hero" departments, such as appliances and mattresses, where it can clearly differentiate itself.

Sears is in the midst of its own three-year transformation, which it would have undergone with or without Target, he said. It also entails beefing up its fashion edge, including next month re-launching its Jessica women's wear brand with a younger, more stylish look.

"Canadians will go and shop new competitors – they will go and shop Target," he said.

"But I think it will become less interesting. They will get back to the retailers that are delivering what resonates."

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