Target is the latest victim in what’s undeniably a difficult market place for retailers at the moment. But that’s not because Canadian shoppers have reined in spending, or refocused efforts on digging out from under record debt burdens.
Retail spending growth in Canada has mirrored closely that of the United States over the past year or so – a period where U.S. consumers have grown increasingly confident in the economy and have started opening their wallets wider.
“Retail sales in Canada have almost precisely kept pace with those in the U.S. since Target opened its first Canadian store in March 2013,” economists at BMO said Friday.
Canadian retail spending has somewhat unexpectedly grown by about 3 per cent or so over the last couple of quarters, respectively. That expanding pie of shopping dollars doesn’t seem to correspond with recent headlines that clothing chains and other retailers are going bankrupt in droves.
But others are making money – and winning the business away from laggards. So-called fast fashion retailers like Zara, H&M, Forever 21 are growing at the expense of some of their failing rivals.
Target’s fate stems in part from the likes of Canadian Tire and Walmart doing a flat-out better job of winning sales compared to the U.S. department store.
“I wouldn’t read too much into one company’s failings in Canada and extrapolate that to say the economy is weaker, or the consumer is weaker,” BMO economist Robert Kavcic said.
Or even five or six. Retailers “come and go all the time,” the economist said.
WATCH: The departure of Target and Sony signal a changing retail landscape in Canada. Mike Le Couteur reports.