As the second largest discount retailer in the United States, the entry of Target into Canada will greatly impact many retailers including Wal-Mart, Costco, Canadian Tires and Sears. Matthew Kan’s blog post about Target Coming to Vancouver states that there are “multiple negative effects [the] new introduction could have on our Canadian economy.” I agree with him that even though consumers may be able to enjoy the benefits of less expensive yet high-end products, many businesses will be hit hard, potentially sending shock waves through the retail industry such as when Wal-Mart arrived in Canada in the 1990’s. As a result of Wal-Mart’s entry, there was a lot of disruption and many retailers went out of business. Given the large power Target has in the retail world, the arrival of Target will cause many businesses to be at a great risk and a potential disruption in the retail industry.
Although I agree with Matthew’s statement about Target’s arrival having a negative impact on Canadian retail companies, I disagree with his statement that “there will be more jobs available, helping boost Canada’s unemployment and economy with the expanse of new job opportunities.” The Huffington Post states that there is a plan to open “200 new stores and hire some 27,000 employees.”1 However, in order to do so, employees of Zellars will inevitably be let go. The Star states, “An estimated 27,300 employees [from Zellars] are being let go as a result of the transaction.”2 The creation of job opportunities at the expense of laying off other employees will not boost Canada’s unemployment rate as there will be even more people that will be unemployed as a result of Target’s entry. The 27,000 new people that will be employed compared to the 27,300 employees that will be laid off will cause the economy to be a little bit worse off than before.
Other Sources:
http://www.vancouversun.com/business/Target+entry+Canada+into+competition/7329733/story.html