American companies such as Wal-Mart, Sears, and Best Buy within the past twenty years have entered the Canadian market, an attractive one to US companies due to the similarities in the market structures. Recently, Target, a US retail giant, announced that the company will enter the Canadian market in early 2013. Target acquired Zellers six months ago, accelerating the American retailers speed to dig into the Canadian market. One of the major challenges the company will face is the bias that Canadian customers have for Canadian products. Target can overcome these biases by establishing a strong customer loyalty, engaging the local producers within their chain to promote Canadian products, and providing organic product lines.
First of all, it's very important for a company to establish a strong customer loyalty. If a company builds a good relationship with its customer, it will always be the first to be picked for any product. For example, Apple has been able to build a strong relationship with computer related products and the customer. When the customer walks into an Apple store, the first impression is stunning for them. Target can take Apple Inc. as an example, and focus on the importance of excellent customers service. If Target representatives can make the customers feel at home and proved a good quality of service, then Target can appreciate the improvements in their balance sheets.
Furthermore, local producers play an important role in the domestic economy. When Target buys from local firms, it would minimize the time spend in distribution. Thus, products can get to the customer fresher, and faster. Not to mention, buying from local farms would ease the process in the supply chain of the company. The reallocation distance would shorten, which means less carbon dioxide is released into the atmosphere. This would also create a good brand image for the company and to the consumer. Consumers would be encouraged to go to Target stores to support the environmentally friendly products by buying them. According to Michael Adams, founding president of the Environics group of research and communications consulting companies, there is a shift in consumer behavior that reflects the increased mainstreaming of environmental consciousness. He also added that Canadians are exercising their consumer power by actively and very deliberately rewarding those companies who take action on the environment.
Moreover, according to statistics Canada, Canadian consumers purchase more organic products than American consumer. Therefore, Target should offer more organic product lines since most of the Canadians are against Genetically Modified products. In contrast, GM products cost much less than organic products, which creates a major issue for the consumers. However, it's evident that Target is a company that promised a statement, which says, " Expect more, pay less" since day one they started operating. Target has the potential to be the market leader by using economies of scales in Canada.
Target's first international expansion will enlarge the company and create a better reputation in the global markets. Tapping into the Canadian market is a big opportunity for Target to prove they have the potential to overcome big challenges not only in the American market but in other markets as well. The company has a lot of experience in the US market, which is also similar to Canadian market. Target should be prepared to establish a strong customer loyalty, engage local producers, and provide organic products to its customers. With these, Target has a great chance to become the market leader in Canada by pushing down Loblaw's to the second place in the retail sector.
http://www.organicconsumers.org/canada/index.cfm
http://www4.agr.gc.ca/AAFC-AAC/display-afficher.do?id=1170942402619&lang=eng
http://sites.target.com/site/en/supertarget/eatingwell_article.jsp?contentId=PRD03-004897
http://www.greenalberta.ca/index.php?option=com_content&view=article&id=85&Itemid=97
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