Day: October 5, 2014

After the much hyped American retailer, Target, launched in Canada in March, the sales did much worse then expected. Target may be finally changing things around with their new adjustment in prices. Target in the United States is popular and successful due to its discount retailing approach. They are able to bring customers a vast assortment of discounted merchandise in one convenient store. However, when it was first introduced in Canada, many customers thought the price was too high for their “discounted” claims. When compared to other stores like Wal-mart and Shoppers Drug Mart, the was no visible price difference despite it being a “discount retailer,” making the company lose its biggest value proposition. As a result of this Target did very poorly in Canada during the first few months and it began to seem not that different from Zellers, a similarly styled Canadian company that struggled in sales prior to its purchase by Target. Only recently has Target finally decided to lower its prices and is now winning the price battle with Wal-mart. When comparing 33 items in grocery, heath, and beauty aisle, Target’s prices were cheaper by 3.9% than Wal-mart. With the introduction of the new prices, Target has found a strong advantage with its new cost leadership strategy. With this new leadership strategy, customers will finally have a very good reason to choose to shop at Target compared to other retailers. 

References:

http://www.huffingtonpost.ca/2014/09/24/target-canada-walmart-prices-kantar_n_5870342.html?utm_hp_ref=target-canada

U.S. retailers getting chilly reception in Canada

Sears and Hudson’s Bay have once been the two major competitors in Canadian department store retail. However, in recent years the Canadian retailer has found growth and expansion while the American retailer is slowly backing out of Canada with major layoffs and closures. The reasons to why become quite evident when you compare the existing Sears stores with Hudson’s Bay stores. Hudson’s Bay improved their services over time and adjusted to the changes in consumer trends while accounting for different customer segments. In addition to their constant renovation of their stores, by bringing in popular, higher-end brands like Polo Ralph Lauren, Alaia, Jason Wu, and Proenza Schouler, to appeal to higher class consumers, collaborating with popular retailer, Topshop, to appeal to younger, trendy customers, and at the same time keeping their affordable in-house brands as well, they extended their customer segments to reach basically everyone. Sears stores on the other hand, has undergone minimal change and expansion in both company brand and products, sticking with the same lower-quality and affordable products, which target a very specific customer segment. Not to mention most of their stores still look the same as they did ten years ago. This alone gives consumers little incentive to shop there given the atmosphere and lack of selection, since competitors like Hudson’s Bay and Target can probably offer better and more varied things with minimal price difference. Even successful businesses, like Sears, need to constantly undergo changes in accordance with the ever-changing consumer tastes in order to become successful even as time passes by.

References:

http://www.theglobeandmail.com/report-on-business/new-look-hudsons-bay-pushes-retail-growth-plan/article10836382/

http://www2.thebay.com/theroom/

http://www.huffingtonpost.ca/2014/01/29/sears-canada-layoffs-job-cuts_n_4690554.html

The unique aspects found in a company’s business model is often what sets it apart from competitors and gives it the lead in the industry. Making a unique yet efficient business model is key to growing the company and expanding into new markets. Take Japanese retailer Muji for example, the retailer, that produces household and consumer goods and known for its “no-brand” philosophy, is set to enter the Canadian market by opening 7-8     stores in the next five years. The brands unique value proposition of environmental friendliness, simplicity, and functionality design sets it apart from many competitors and fits extremely well with Canadians own environmentally clean and stainable image. Though the brand’s image targets and attracts a seemingly specific customer segment (think wealthy and trendy urbanites), the vast assortment of quality everyday products is bound to draw much attention from the mass market. In addition to its unique value propositions, the brand’s distribution channels, as it prepares to launch in the Canadian market, is also quite different. Unlike Target, who has also recently just launched in Canada, Muji does not plan on opening multiple stores at once, but instead focuses on one store per year. This will increase the amount of attention put on each store and will eventually lead to more customer awareness on the brand, and will be perhaps a better idea since despite Target’s vast popularity in the United States, its sales in Canada have seen a steady decrease overtime. 

References:

http://www.huffingtonpost.ca/2014/09/29/muji-canada-toronto-vancouver_n_5902066.html?utm_hp_ref=canada-business

http://www.cbc.ca/news/business/same-store-sales-at-target-canada-tumble-11-in-second-quarter-1.2741617

http://www.cbc.ca/news/business/target-canada-s-failed-launch-offers-lessons-for-other-retailers-1.2711149

http://www.muji.us/