After years of anticipation Canadian consumers can soon set their sights on a new shopping destination, as U.S. discount retailer Target has announced plans to set up its stores north of the border.
Target Corporation said Thursday that it is paying the Hudson's Bay Company $1.83 billion to acquire up to 220 Zellers stores from the 279 that are currently open across Canada.
Target says the deal doesn't mean an immediate end to the Zellers brand, but is rather the first step in opening between 100 and 150 of its own stores here by 2014.
Although the money is expected to change hands in May and September of this year, "Zellers Inc. will sublease these sites from Target and continue to operate them under the Zellers banner for a period of time," the company said in a statement announcing the deal Thursday.
According to Target's chairman and CEO, his company's first move outside the U.S. will be a boon for Canadian consumers interested in a "superior shopping experience."
"We are very excited to bring our broad assortment of unique, high-quality merchandise at exceptional values and our convenient shopping environment to Canadian guests coast-to-coast," Gregg Steinhafel said in a press release promising "a more robust Target presence in Canada over time."
Commenting on the deal in a statement Thursday, Hudson's Bay Company Governor Richard Baker said, "This transaction provides attractive long term value and will allow us to invest substantial capital into our department store and specialty store businesses to continue to drive growth."
Target expects to spend approximately $1 billion to remodel and reopen the existing Zellers stores under its own brand. The company also says it will have hired up to 20,000 people once its stores are operational.
The Minneapolis-based company's more than 1,700 stores across the U.S. have long been a favourite of shoppers on the hunt for what the retailer has dubbed "discount-chic." But it remains to be seen how Target will stack up in Canada.
Robert Soroka, a marketing professor from McGill University, said the move will serve consumers well.
"This is a much needed infusion of energy into Canadian retailing. I think that Zellers has lagged a little bit and I think that right now, with Target coming, Canadian consumers have a lot to look forward to," he told 麻豆影视 Channel.
Soroka said the retail chain will have to account for things like consumer habits that are distinct from those in the U.S., as it confronts competitors like Walmart.
"Target has to remember that the cost of doing business in Canada is much higher. Operating expenses are higher," he said. "So with respect to any kind of pricing strategy, that's something they're going to have to take into consideration."
While speculation has been rife the company was considering a move north of the border for some time, Target only confirmed its international expansion plans in June of last year.
It had been stymied, however, by the hunt for suitable locations, and most recently, the economic slowdown.
Baker's U.S.-based real estate development company NRDC Equity Partners LLC enjoys strong ties with many of the biggest retailers south of the border. It paid $1.1 billion to acquire the Hudson's Bay Company in 2008.
