Canadian Target stores (NYSE:TGT) have dropped prices in an attempt to entice customers from rival Walmart (NYSE:WMT). Target's products now cost 3.9 percent less than Walmart's in a basket of identical consumer goods, according to a pricing study from Kantar Retail.
The cuts suggest Target is willing to continue dropping its prices to compete. When the retailer first entered Canada, its prices were virtually identical to Walmart's, reported Financial Post.
There have been consumer complaints that Target apparel and decor cost more in Canada than in the United States. Target even issued an apology back in June for its bungled entry into Canadian markets.
"Sharpening price is one of the key initiatives being implemented in [Target's] turnaround strategy, alongside improving in-stocks and expanding the assortment," Robin Sherk, director of retail insights at Kantar, told the Financial Post. "While Target handily led this basket, it continues to struggle to shift pricing perception amongst Canadians, despite plentiful assurances of its 'unbeatable prices' in store."
The study evaluated the price points of identical merchandise baskets that included 33 national brand items from the edible, non-edible, health and beauty categories. If customers used Target's loyalty debit or credit RedCard, the price would have been 8.7 percent less. Most of the savings were accomplished through price cuts gleaned from 36 items that were on sale.
In comparison, Walmart's basket only had one item on sale and 67 percent of the items were priced within 3 percent of each others' price points.
Last month Target CEO Brian Cornell said he would make helping the struggling Canadian unit a top priority. Target Canada lost $1.36 billion in pre-tax earnings after opening 130 stores since March 2013. In spring the retailer fired the president of Canadian operations after finishing its first year up north with a four-quarter operating loss of $329 million.
-See this Financial Post article
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