Target Canada to begin stock liquidation in stores in February

Target Canada informed its customers that it will begin to liquidate stock from its Canadian stores early in February. Target announced last week it would shut all its 133 stores in Canada soon.

Eric Hausman, the Target spokesperson for Canada, said to CBC: "Nothing definitive yet in terms of liquidation timing [but] we do expect it will begin in about 2-3 weeks." Within four to five months, both its stores and distribution centers in Canada will be history. The chain, owned in the US, will need to move quickly not only to move all its merchandise but fixtures and office supplies. CBC reporters on the ground saw full stores and even lineups but so far there have been no heavy discounting of goods.

The chain has more than 17,000 employees in Canada and the company claims there is a trust fund of $70 million to provide employees severance pay. When the closure was announced Target issued a statement about the fund: "The Employee Trust will provide all eligible Target Canada-based team members with a minimum of 16 weeks of compensation, including wages and benefit coverage for those team members who are not required for the full wind-down period." Target launched it operations in Canada less than two years ago in March of 2013.

Many customers expressed disappointment at the prices which often were not very competitive with competing chains such as Wal-Mart, or Canadian Tire. The chain had problems with distribution as well and shelves were often not well stocked. Mandeep Malik, a retail analyst from McMaster Univerity said: 'I think they overestimated the reception they would get.' In its first year of operation alone the company lost $1 billion. Even though losses were shrinking of late, the chain decided to cut its losses and leave. As recently as last July, the executives at Target spoke of still being committed to staying in Canada.

US retailer Aeropostale, which expanded into Canada a decade ago, is also closing 77 of its Canadian stores. Sam's Club, a division of Wal-Mart, also closed its stores Big Lots, another US chain, closed its Canadian stores in February of last year. Wal-Mart also axed 200 jobs at its Canadian head office last November. Fashion chain Mexx Canada is closing all of its 95 stores in Canada by the end of February.

The liquidation of Target stock is expected to take between 16 to 20 weeks with no returns being accepted. Target estimates closing will cost it about $600 million dollars. Nordstrom Inc.an upscale US fashion chain opened its first Canadian store in Calgary just last September. In spite of the fact that the Calgary store may be hurt by Alberta's dependence on income from oil, it intends to open new stores in Ottawa and Vancouver.

Greed, Gouging, and bad citizenship

This may be a bit overdone. All retailers may not be in the same situation. I am not sure whether the Canadian dollar has done that well in terms of Asian currencies so imports from places such as China may not be much cheaper and the same is true of Europe.
However, there is probably a degree of truth in what Georgetti says. No doubt we will hear all sorts of squawks from retailers about unpatriotic Canadians buying over the border and not supporting their local ripoff retailers. Anyway big retailers such as Walmart are not Canadian to begin with!

Greed, gouging and bad citizenship
KEN GEORGETTI
Special to Globe and Mail Update
October 17, 2007 at 11:34 PM EDT
What have Canadians gained from our loonie’s parity with the U.S. greenback? A more valuable currency should make the things we buy from other countries cheaper.
But, over the past five years, as the value of the Canadian dollar has appreciated against the American dollar, that has not been what’s happened. Canadian retailers have not lowered their prices — instead, they have used the rising dollar to gain excessive profits at the expense of consumers and the whole economy.
Their profits have soared. Return on their investment is even higher than in the booming oil and gas sector, jumping from a healthy 11 per cent to an even higher 16 per cent. In dollar terms, the last-quarter retail profits are running at $4-billion, almost twice the level of 2002.
While consumers are getting no breaks, big retail companies are not sharing these profits with their employees. In fact, they have actually cut wages. Average hourly earnings fell by 5 per cent in retail over the past year, even though an average retail worker makes 25 per cent less than the national average hourly wage.

Greed, gouging and bad citizenship are the words that come to mind.
Retailers in Canada buy many of their products in U.S. dollars or related Asian currencies, but sell them in Canadian dollars. As the exchange rate swings in the loonie’s favour, their costs fall. Lower import prices should have been passed onto Canadian consumers as their revenues rose.
The Bank of Montreal estimates that, even with the Canadian dollar worth as much as the U.S. dollar, a typical basket of consumer goods costs 25 per cent more before taxes on this side of the border. While retail prices should not necessarily be identical, there is no justification for such a huge markup.
The government also has clearly failed workers and consumers. Both the Conservatives and Liberals plan across-the-board cuts to corporate taxes, which would boost retail and wholesale profits even more.
We need answers about why profit margins are so high and prices are not coming down. We also need a higher minimum wage to make sure a fair share of the gains go to retail workers.
Lower prices would be a boon to working families. They would also allow the Bank of Canada to ease up on interest rates, taking some of the steam out of the soaring dollar and making it cheaper for manufacturers and other businesses to invest in Canada
The negative impact of high retail prices recently was confirmed again this week as the Bank of Canada refrained from lowering interest rates, as the Americans have done recently, on the grounds that inflation is too high.
For months, the Canadian Labour Congress has expressed concern that the rising dollar is undermining our manufacturing and resource processing sectors by driving up the price of Canadian-made products in foreign markets. Indeed, nearly 300,000 well-paid manufacturing jobs have disappeared during the loonie’s surge from 65 to more than 100 U.S. cents.
Lower retail prices won’t save manufacturing jobs on their own. But they would mean lower inflation. Evidence of lower inflation would allow the Bank of Canada to reduce interest rates and provide some shelter from the high value of our dollar.
Ken Georgetti is president of the Canadian Labour Congress.