Target to acquire 220 Zellers stores, enter Canadian market In a move that the New York Times affirms "promises to reshape Canadian retailing," the U.S. retailer Target Corp. announced that it would acquire up to 220 Zellers department stores in a deal worth an estimated $1.8 billion.

The deal helps Target to move into the Canadian market for the first time and will eventually lead to a phasing-out of Zellers, the last major discount chain based in Canada. Wal-Mart entered the Canadian market in 1994 and has experienced solid growth since, and Target hopes to follow in its footsteps.

Target has long harbored a desire to grow into the Canadian market, but had a difficult time procuring retail space; the deal with Zellers will ultimately give the retailer prime access to the Canadian real estate market which was significantly less affected by the recession than the U.S. market.

Target will not start converting the Zellers stores into Target-branded entities until some time in 2013, according to the company; within three years, Target hopes to have 150 stores under its own name in the country. Target stores are already popular with many Canadians who shop at the U.S. stores during cross-border shopping excursions and Target hopes that goodwill extends to its Canadian stores.

Target is following the successful strategy that Wal-Mart employed when it first entered the Canadian market by acquiring an already-known brand and then expanding. Though Target's profit margin was hit hard by the recession, the subsequent uptick in consumer spending over the past few months has served like a shot of epinephrine to the retailer, effecting profit and same-store sales increases.

Goldman Sachs, the banking giant, recently upgraded Target as it expects it to continue to perform well as consumers spend more money on purchases, but still remain value-conscious. Goldman also cut its rating on Wal-Mart, however, affirming that its focus on lower-end consumers could restrict it from benefiting from an improving economic outlook.
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  1. Interesting to see Target enter the Canadian market as it continues to try to fight off Walmart.

  2. Actually Z is "zed" in the whole English-speaking world (derived from the Greek, zeta) except for the US, where apparently Noah Webster decided it was easier to remember if it rhymed with bee and pee and all those other eees. Courtesy of Sesame Street and other American TV the use of "zee" has grown but thank you Zellers for fighting the good fight.and now that Zellers Canada is targetrting to put up more zellers in the area...thanks for sharing this.