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Target Canada made a big entrance into the Canadian retail market in 2011 when it purchased Zellers leases in many locations and converted their stores. After posting large quarterly losses totalling over $2 Billion in their almost 2 years of operation, Target has now decided to cut its losses and close all its 133 stores in the country. Target's Chariman and CEO Brian Cornell stated in a press release that "We were unable to find a realistic scenario that would get Target Canada to profitability until at least 2021. Personally, this was a very difficult decision, but it was the right decision for our company. "
This news is set to significantly change the retail market in Toronto, with many malls in the GTA being anchored by a retail giant that will be closing its doors. Millions of square feet of retail space is now set to be freed up as the GTHA's 29 Target stores close their doors, and questions remain as to what will replace the retailer. Rumours of such a move by the large format retailer would vacate its operations in the country had persisted since the retailer's lacklustre launch nearly 2 years ago, but many had expected Target to push through the losses and move onto profitability.
Target acts as the primary retail tenant for many smaller malls in the GTA, who are now left with their largest retail spaces sitting empty. While Target Corporation is set to lose $5.4 billion in its Target Canada venture, the financial impacts are set to be much broader. Target currently acts as an anchor retailer to 13 malls across the GTHA, many of which will likely now see large drops in traffic.
The recently opened Stockyards big box shopping centre at St. Clair and Keele—alternately a piece of interest, praise, and criticism on our Forums—will be faced with the closure of its primary retail tenant less than a year after the opening of the complex, and with some of its smaller retail tenants still opening their doors. The retail centre will now be faced with the difficult task of finding a new large format retailer to take Target's place. Walmart has a nearby location.
Menkes' new development on Toronto's waterfront, Harbour Plaza Residences and the Sun Life Financial Tower, will also face a new challenge of finding a tenant to replace Target in the large format, 145,000 square foot retail space in its podium. The space was originally set to open in October of 2016 with Target as the primary tenant, but now questions remain on what will fill the space.
Other malls around the GTA that now face challenges for primary tenants include the likes of Centrepoint, Bridlewood, Hillcrest, Cloverdale, and Thorncliffe. The announcement of Target's closure comes as an additional blow to these smaller malls and others like them which are already facing steep drops in traffic as retail traffic continues its shift to larger destination malls and to newer power centres.
What are your thoughts on this news? Feel free to leave a comment below in the space provided, or head over to our Forum thread for Target.
