Target's Canadian launch expected to spark price wars

First customers Scott Lester, left, and Sam Skelhorn, exit the new Target store with their purchases in Guelph, Ont. on Tuesday, March 5, 2013. (Dave Chidley / THE CANADIAN PRESS)

The arrival of U.S. discount giant Target in Canadian markets will introduce some much-needed retail competition, providing shoppers with more opportunities to benefit from price wars, experts say.

As eager shoppers streamed into Target stores that opened Tuesday in three Ontario communities, analysts said the launch will put a lot of pressure on big-box retailers like Wal-Mart, Sears, Canadian Tire and Loblaws Joe Fresh.

And that could mean lower prices across the board.

“We haven’t had a good retail price war in quite some time in Canada,” retail analyst John Winter told CTV’s Canada AM on Tuesday. “It’s exciting to see who will end up with a good market share.”

Target has assured customers it will focus on being “competitively priced” with other retailers in Canada.

"In certain cases, the prices will actually be completely on par with U.S. prices and in some cases there might be some differences,” Target Canada spokesperson Lisa Gibson told The Canadian Press. “Our overall goal is to make sure we're competitive with the marketplace."

But Winter warned that likely means prices in the Canadian locations will be higher than in Target stores south of the border.

“In Canada, we can source the material for just the same price they can in the States. The difference is in the labour cost. Minimum wage higher, there are more public holidays, for instance, to be paid for out of sales,” he said.

That didn’t deter shoppers from lining up in front of Target outlets in Guelph, Milton and Fergus, Ont., well ahead of their 8 a.m. opening. Some arrived as early as 5:30 a.m. and left with shopping carts full of merchandise.

A number of shoppers who braved the cold in line said they regularly head over the border for their Target fix.

“We just went there Saturday, in the States,” one man waiting outside the Milton location told CTV Toronto.

The first Ontario locations in relatively smaller markets are part of a test program for the phased rollout of the Target brand across Canada.

Target expects to open 124 Canadian locations in 10 provinces by the year’s end.

Target’s Canadian launch comes as some big-box retailers -- including Best Buy Canada and Sears Canada-- have recently announced layoffs, citing a rise in online shopping and a shrinking demand for super-sized stores.

Target Canada President Tony Fisher announced the Canadian launch on Monday, telling reporters touring the Guelph store that the company is offering a new type of shopping experience.

“There’s an engaging team who will engage with you while you're shopping, to ask ‘can I help you find something?’” he said. “That’s going to be a new shopping experience that’s going to be totally unique in Canada.”

Some shoppers said they hope more competition will also bring better customer service.

“I definitely think it’s going to give Wal-Mart a run for its money,” said one woman outside the Milton location. “Definitely going to get them step up their customer service which has been lacking for years.”

Target plans to open another 21 stores throughout Ontario this month, although the dates haven't been announced.