Target plots 200-store push into Canada

Target plots 200-store push into Canada

Summary:

Target Corp. recently discussed the possibility of opening up to 200 stores in the Canadian market at a Toronto shopping centre trade show. Trailing behind Wal-Mart as the second-largest mass merchant in the USA, Target is looking to open six to 10 stores in late 2014 or 2015. This is the first time ever representatives from Target attended the trade show which is an huge indication of Target's intention to invest in Canada. To start off, Target is looking for an urban strategy beginning with the Greater Toronto Area. According to Amy Reilly, a Target spokeswoman, Target is “exploring opportunities in Canada,” and they “are optimistic that [their] first stores could open by mid-decade.” Despite the opening of a couple of hundred units which could potentially change retail in Canada, Canadian retailers have been consistently outperforming the U.S. counterparts since the recession ended without the notice of U.S. retailers.

Connection:

Target’s optimistic intention to seek opportunities in the Canadian retail market is closely associated with the investing activities. According to the investing activities in Chapter 1, Target must acquire things that will enable it to carry out the activities for which it was created. Target's intended expansion is considered as an investment because revenue will be generated after the purchase of properties and the sale of products exactly like the operating Target retails in USA. Also, Target must include financial statements as it is a public traded corporation to illustrate that they're capable of expanding its retail over the border. By informing Target's investors or potential investors of their strong financial position, Target could potentially cause an increase in its share value. On the other hand, if Target have insufficient cash flow based on the cash flow statements, it can analyze its balance of assets and liabilities through the balance sheet to request a mortgage. Another option to increase the cash flow would be issuing more shares. Although the financial statements can aid the internal users in making a decision and analyze their capabilities, it cannot predict the profitability of an investment.

Reflection:

With the semi-dominance of Target in the United States, it is an easy task to open another 200 stores in Canada. However, the retail market in Canada may be different than those in the states. Although statistics have shown that retailers in Canada are in fact outperforming those in the states since the recession, the same thing may not apply to the future Target stores. Despite the usefulness of financial statements, it will not aid Target's management team in predicting the future revenue and the success of Target. Target must find a way to offset its expenses of opening stores by attracting customers from other retails through either price or quality. Target could also analyze and compare how other successful Canadian retails, such as Wal-mart, run their business. Also, with the opening of approximately 300 stores in the next decade, the prices of products may well fluctuate and potentially eliminate the minor retailers in Canada due to the increase of competition in the retail market.

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