GUELPH, Ontario (Reuters) - U.S. discount retailer Target Corp (TGT.N) gave a first look at one of its new stores in Canada on Monday, showing freezers with locally-produced cakes and the country’s iconic beaver-logoed Roots apparel brand, designed to appeal to Canadians in its massive expansion outside the United States.
Target’s bold entry is expected to threaten a range of Canadian retailers, from department store operators to grocers and pharmacies, and Wal-Mart Stores Inc (WMT.N) has planned its own growth spurt in Canada to defend its turf.
Target will open three stores in southern Ontario on Tuesday, the first wave of a multi-billion dollar push into Canada that will add 124 stores by this Christmas shopping season.
“We know this is an incredibly competitive retail market place,” Target Canada president Tony Fisher told reporters during a store tour in Guelph, an hour’s drive from the Ontario capital of Toronto. “We have a lot to learn, and so I think we’re going to hit a lot of home-runs, but I think we’re also going to have some misses as well.”
The other two pilot stores are in the small Ontario towns of Milton and Fergus. They are the first of two dozen stores in the province that will welcome customers later this month, before their official opening in April.
Target expects to spend $1.5 billion on its Canadian expansion this year and some $500 million next year.
The Minneapolis-based retailer expects big things from Canada, with annual Canadian sales seen rising to at least C$6 billion in as little as six years, compared to the $72 billion the chain currently sells in the United States.
It has also said that many of its Canadian stores will likely be much more profitable than its average U.S. locations.
While Canadian stores have less retail space than standard U.S. stores, averaging 114,000 square feet versus 135,000 square feet, Target said they will carry a full range of products, unlike the chain’s smaller CityTarget U.S. outlets.
Canadian outlets will offer everything from groceries, though not fresh produce, to Apple computer products, as well as the cheap-chic fashion lines for which Target is well-known.
To reflect Canadian tastes, for example, Target has worked with Roots Canada, a domestic brand featuring a beaver in its logo, to offer a limited edition fashion line.
Fisher said Target Canada will seek an environmental certification for all 124 stores, to reflect energy efficient equipment such as motion-sensor freezer lights.
Target has hired 5,000 employees in Canada for its first wave of store openings and expects to hire 27,000 in total. It will run three distribution centers, two of which have already opened.
Wal-Mart, which set up shop in Canada in 1994, plans to invest more than $750 million in 2013 to open or remodel 73 Canadian stores, its most ambitious Canadian expansion ever.
Reporting By Susan Taylor and Solarina Ho; Editing by Janet Guttsman and Andrew Hay