U.S. Retailers' Push Into Canada Continues

In a deal that's interesting for several reasons (how often do we see two direct retail competitors trade stores?), Wal-Mart Stores Inc. plans to buy 39 stores Target Corp. owns in Canada.

The stores formerly belonged to Zellers, a local chain. Target bought 220 leases from Zellers earlier this year as a way of gaining entry into the Canadian market. Wal-Mart already has a presence in the country.

Target had no plans to use the 39 stores slated to go to its rival.

Although the locations were passed over by Target under its $1.8-billion deal with Hudson's Bay Co. to acquire the leases for up to 220 Zellers locations, Cheesewright said he's satisfied they are desirable.

"We'll only be focusing on sites where we don't have a Walmart nearby or it gives, particularly in urban areas, people access to Walmart who would have to drive a long way before," he said in an interview.

Target's first-time move into Canada and Wal-Mart's expansion ambitions are part of a larger trend among U.S. retailers and developers to open venues up North. At the moment, Canada boasts a much healthier consumer climate than the U.S., plus many areas of the country are under-retailed. That doesn't mean that U.S. chains are guaranteed a smooth entry into the market, as this example shows.

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