Which retailers are ready to step up after Target North’s failure?

The following article is a guest post by Dan Greenstein.

Target Canada received approval this week from an Ontario Superior Court judge to sell back leases on 11 of their 133 locations across Canada. Oxford Properties and Ivanhoé Cambridge are contributing $138 million in lease buybacks which will go towards Target’s bankruptcy proceeding in Canada.
The proceedings have generated some controversy amongst Target creditors as it had created a holding company for its real estate assets, whose $1.9 billion claim would make it the largest creditor. Other creditors and suppliers are going to court to argue that their claims should be considered before the company pays leasing obligations back to itself.
This is just the latest chapter in Target’s expansion and ultimate implosion north of the border. Many factors have been cited in the unsuccessful venture, not the least of which was the large number of outlets opened within a very short time frame, coupled with poor management of both inventory and public relations. While a small dinghy is easy to keep afloat with the bailing process, the same cannot be done when the Titanic takes on water.
Clearly the projections and financial analysis that went into Target’s decision to take on existing Zellers locations were done without a solid understanding of the Canadian consumer market and traffic of the physical stores. While some of the goods were unique to Canada, the majority of consumers seeking those items are within driving distance of cheaper and broader cross-border retail offerings, including Target’s U.S. stores.
What businesses will want to occupy locations that have now housed both failed big-name Canadian and American retailers is still up for debate. Many locations will be too close to existing stores for the likes of Canadian Tire or Walmart, and big box retailers will be leery of duplicating the failures of Zellers and Target Canada. A fitness chain has expressed some interest, and given Loblaws’ takeover of Shoppers Drug Mart, their announcement today to add 50 new stores may include some of these locations.
With 75 locations in the U.S. and only 1 in Canada, a food and entertainment emporium like Dave & Busters might be well advised to take advantage of a weak Canadian dollar. Other large American names like Kroger’s might also want to compete with Loblaws’ expansion plans, while Canadian retailer London Drugs may want to try larger stores to help expand eastward.

Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians, available now on Amazon and at Chapters, Indigo and major bookstores, and as an Audiobook on Amazon, Audible and iTunes.