With Target Corp. (NYSE: TGT) converting Zellers stores across Canada to its own brand, Canadian retailers need to bolster customer loyalty or lose market share, a new survey has found.
The survey, released this morning by management consulting firm SATOV Consultants, looks at which Canadian retailers are likely to lose market share as a result of Target’s arrival.
The survey found that Wal-Mart Stores Inc. (NYSE: WMT) customers showed the least brand loyalty, with 57% of shoppers indicating they will shop less frequently in favour of Target stores. Forty-one per cent of Sears shoppers indicated a willingness to shift to Target and 37% of shoppers at the Bay indicated the same.
The survey found higher brand loyalty at Canadian Tire Ltd. (TSX: CTC) and Shoppers Drug Mart Corp. (TSX:SC) with only 19% of their shoppers planning less trips to the stores in favour of Target.
But Mark Satov, president and founder of SATOV, said the survey numbers don’t indicate a prediction of the market share Target could scoop up.
“The survey is a warning sign that retailers should get closer to their customers and understand what they want by category, but it is not a prediction of actual [market] share gain.”
Satov noted that overlapping locations of the various retailers will likely play a key role – and noted that viewed by that lens, both Wal-Mart and Canadian Tire are more likely to face direct competition from Target than Sears and the Bay.
He noted that a key finding of the survey was Target’s high brand awareness with Canadians.
“Most people know about Target and a pretty significant percentage of the people who know about Target are looking forward to them coming,” he said. “I think that’s interesting and I guess partially frightening for some retailers.”
In May, Target announced that it will change five Metro Vancouver Zellers locations to Target-branded locations. (See “Metro Vancouver to get five Target locations” – BIV Business Today, May 27.)