Formidable foe awaits on the Northern front

Target’s first stores in Canada are not scheduled to open until 2013, but this week the company can get a glimpse of what it’s up against when Walmart Canada president and CEO David Cheesewright is scheduled to speak at the Jefferies 2011 Global Consumer Conference.

He’s on the program Tuesday at 10:10 a.m. Eastern time, and while his remarks are not likely to be devoted exclusively to Canada, it is hard to imagine some investor not asking Cheesewright for his perspective on Target’s pending arrival, especially since the opening of 100 to 150 new Target stores means sales are going to have to come from somewhere. 

While Target’s planned openings sound like a lot of stores, and it is in the context of Target, the company faces an uphill battle in three major respects. It is attempting to integrate and remodel a large number of acquired store locations in its first international foray and entering territory where a larger and highly regarded rival has ample time to fortify an already well established defensive position. Walmart ended last year with 325 stores and has plans to open 40 additional stores this year, so it should end 2011 with roughly 333 stores with the majority of those being relocations, expansions or conversions of discount stores to supercenters. The company is in the midst of a U.S.-style supercenter conversion, so by the end of this year roughly half of Walmart’s roughly 333 units will be supercenters, and by 2013 the total store count figure should be north of 350 with supercenters accounting for roughly two thirds of the total and that’s assuming expansion and conversion activity doesn’t accelerate from the current pace in anticipation of Target’s arrival.


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