Locations Drive Traffic in Canada: Target CFO

TORONTO — Target Corp. does not see grocery departments as being as important to drive traffic in Canada as they are in the U.S., a Target executive said at an investor conference here Thursday.

Most of the Zellers locations that the company acquired in 2011 and has begun reopening as Targets “are outstanding sites — they are in great malls,” said John J. Mulligan, executive vice president and chief financial officer. “They are high-frequency sites to start with, so we benefit from that traffic naturally. And so while food is an important component, we perhaps don't need the food as much to drive the frequency because we're already in those high-frequency locations.”

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That’s a benefit the company expects from its Canadian stores “perhaps more so than the whole chain in the U.S.,” he said in a presentation at the CIBC World Markets Retail and Consumer Conference.

He also said he believes the Canadian grocery competition is more formidable than what Target faces in the U.S. “When you look across the spectrum of the operators, they are very, very strong operators in Canada,” Mulligan said. “You look at the grocery operators — very, very strong, much stronger than that what we see in the U.S.”

He said, however, that retail square footage per capita was lower in Canada than it is in the U.S., suggesting that the chain might face less competition overall.

He also tipped his hat to U.S. based rivals Wal-Mart Stores and Costco Wholesale Corp. — both of which have a strong presence in Canada — as well as native general merchandise retailer Canadian Tire, as being tough competitors.

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