TARGET GEARS UP IN CANADA
By: Caroline Van Hasselt, DOW JONES NEWSWIRES
TORONTO (Dow Jones) -- Target Corp. (TGT) plans to hire 100 people in Canada within the next six months, as it gears up to open its first stores outside the U.S. in March 2013.
"We're accelerating the headquarters, and getting the team in place," Target Chief Executive Gregg Steinhafel said in an interview in Toronto before the U.S. retailer's sponsored IndyCar racer Dario Franchitti won the Honda Indy Toronto Sunday. "We looked at, what is it going to take to really win in the marketplace, and it's going to take more Canadians than we originally thought."
Target, known for its "cheap chic" image, agreed in mid-January to pay Hudson's Bay Co. C$1.83 billion ($1.85 billion) for the leasehold interests in up to 220 sites operated by Zellers, a discount retailer owned by Hudson's Bay.
In late May, Target announced the location of its Canadian headquarters in Mississauga, west of Toronto, and identified the first 105 Zellers sites across Canada that will be converted to Target stores, with most opening in 2013. The company intends to spend $10 million, on average, to remodel each location. Target has said it expects annual sales of at least roughly $6.3 billion within six years.
With key U.S. executives currently in the process of relocating to Canada, Minneapolis-based Target is moving quickly to build its management team, supply chain and information technology infrastructure here, as well as analyzing the market and determining how to remodel selected stores. The company expects to add 100 new employees by year's end before the store hiring process, which will begin in 2012. Each store is expected to employ about 150 to 200 people.
"We're moving fast and furious to make sure that we have everything in place so we have a successful entry," said Steinhafel.
He said expansion costs are running slightly higher than expected only because they're moving faster here than they had initially planned. "It's just a larger team member base to support the operations than we originally expected, and some of the expenses are just timing related," said Steinhafel. "We were able to make the decisions a little earlier, and we're a little ahead of the game and spending money a little sooner than we originally thought."
Steinhafel was in Toronto for the Honda Indy, where Target's Franchitti held off teammate Scott Dixon to win the crash-filled race and move into first place in the Indy Racing League standings. Scottish-born Franchitti, the husband of U.S. actress Ashley Judd, joined the Target Chip Ganassi Racing team in 2008.
Franchitti's win here Sunday was an added bonus for Target, whose arrival to Canada is expected to shake up the retailing landscape.
According to Satov Consultants, a Toronto-based management consulting firm, Walmart Canada Corp. has the most to lose by Target's arrival, with 57% of consumers surveyed saying they would be less likely to shop at Walmart. Sears Canada (SEARF, SCC.T)was next with 44%, followed by the Bay at 37%.
"Most Canadians know who they are, and more than half of Canadians (surveyed) are excited that they're coming," said Satov founder Mark Satov. "They have an excellent headstart, given the amount of time that they have. They need to take the goodwill that Canadians have shown and make sure they convert that into a positive shopping experience."
Steinhafel said Target is focused on delivering the U.S. brand and store experience to Canadians in outlets that are slightly smaller than the U.S. counterparts, while tailoring the product mix and service to the community it'll be serving. "The challenge will what do we edit, how do we edit, how do we make these stores look, feel, act just like a Target store in the U.S.," he said. "We're very confident that we'll be able to edit appropriately to make sure we deliver the right breadth of experience."
"There's no shortage of great competitors here in Canada, and we're going to have to be on our game to make sure that we can compete effectively against them," he said. "We have a lot to do. We're very excited. We like to win."