Since last year there has been a ton of talking going on about Target making the move into Canada and wiping out hundreds of Zellers stores across the country. But just like anything else that’s going to have a major effect on the economy, it’s an issue that has a lot of debate surrounding it.
Is this a good thing, or a bad thing for the people of Canada? For those that are getting tired of Wal-Mart being one of our only options, it’s a good thing. For those who are looking to profit from the move, but aren’t actually affiliated with Target, it’s also a good thing. But for those who once worked at Zellers stores, or do still and are now counting their days? Not so good. It’s little wonder it’s an area of high debate. But what effect really, will Target moving into Canada have on our economy?
First, let’s look at the initial sale. In January of 2010, Target purchased 220 leases from Zellers for the price tag of $1.83 billion. No, that is not money that is going directly into the pockets of Canadians. But it’s still quite a boon to our country nonetheless. $1.83 billion coming into our country from the United States. Say what you will about foreign investors, but that fact alone is a very good thing.
And that’s not all the money Target’s going to be bringing in to the country, either. The company has already announced that it would be investing $10 to $11 million per store that it opens. Again, that’s money that’s going to go into the pockets of contractors and private individuals. But still, money coming into the country is rarely a bad thing.
Not all of the 220 stores purchased will be used for Targets however. Target will sell some of those leases or, return them to their original owners. In total, Target plans to have 150 stores throughout Canada within the next four years.
It doesn’t really matter who’s getting the lease though, as 220 stores will still be shut down – at least temporarily while they make the switch from one store’s name to another. And those 220 stores housed thousands of Canadian employees – employees that are now, or are soon going to be, out of work. Not so great for the Canadian economy.
But it’s not as though those former Zellers employees will have no chance whatsoever. According to the Toronto Star, Target is planning on hiring 27,000 employees across the country to fill the stores that will soon be opening. And while 400 Target staff already work at the Mississauga, Ontario headquarters for Target, the company is still planning on hiring 300 more.
And not only that, but other major retailers across the country are planning on hiring more staff, and opening more stores, just to remain competitive with Target.
According to Bloomberg, Wal-Mart is hiring 4,000 new employees this year; and Sears Canada has also had to employee many individuals after opening its megastore in Ottawa last month.
Take all of this into consideration, along with the fact that consumers are going to be shopping more than ever once Target opens in 2013, simply to satisfy curiosity; and the fact that any stores in the vicinity of a new Target will also benefit, and it’s hard to make a case against the retail giant. But, it’s not all good news.
Canadian Tire, one of the biggest stores in Canada up until now, says that it’s looking at losing about $855 million in sales once the new stores move in; and there’s no telling how many other major department stores are going to have the same problem.
Just like everything else that happens in the economy, the Target transition is definitely not going to be a perfect one. It will be felt by Canadians all across the country; and some in the very worst possible way – by losing their job. But Target also shows a lot of promise, and has definitely already brought an influx of cash into Canada.
Only time will really tell if the pros outweigh the cons on this one, and if Canada’s really going to be “on Target” with this new move.
