Wal-Mart's Canadian venture reshaping the country's retail landscape - includes related article on Council of Canadians attempt to prevent Wal-Mart expansion - Company Profile

Discount Store News, June 20, 1994 by Jim Fox

Wal-Mart's Canadian ads inform readers: 'You've got to buy Canadian to sell Canadian ... It's our commitment, but the last word is yours.'

Wal-Mart's move into Canada includes a marketing strategy designed to put forward a distinctive Canadian identity while retaining its winning American-style merchandising formula.

The U.S. retailer is taking a "we're Canadian" stance as a foreign mega-competitor entering into the somewhat docile Canadian marketplace. Wal-Mart is poised to shake up the future of retailing north of the border as it "frantically" converts 122 former Woolcos across Canada to its own format.

Wal-Mart bought all the non-unionized Woolco stores from Woolworth Corp. earlier this year. It has kept the stores open, running them under the Woolco banner while the massive remerchandising, renovations and staff retraining are under way. A few Woolcos have been completely changed over--grand reopenings are likely to be held in these units sometimes next month--but most stores are in various stages of restructuring.

Greeters have appeared at the entrances, employees huddle to do the Wal-Mart cheer every morning and cash register slips carry the U.S. name, but the signs out front still read "Woolco." The first of Wal-Mart's distinctive blue-and-white signs are expected to appear on 36 stores in Toronto and southern Ontario by early fall, then spread across Canada once the stores are remade internally and their staffs are retrained.

Wal-Mart officials held one major news conference to discuss plans for the Canadian market and are running full-page advertisements in newspapers across Canada telling the shopping public what to expect.

Headlines on the ads include: "You've got to buy Canadian to sell Canadian," and, "It's our commitment, but the last word is yours." The ads carry photos and statements along with Canadian hometowns of Wal-Mart staffers who include president and chief executive officer Bruce West, the former Woolco chain boss, from Quebec City.

The messages being delivered are crafted to assure Canadians they won't be selling out on their country by shopping at Wal-Mart and to appeal to their desire to be treated better than has been the norm at many Canadian store chains.

"Why has Wal-Mart Canada made a public pledge to buy Canadian-source merchandise whenever we can? Because we are a Canadian company, managed and staffed by Canadians, and with an important stake in the prosperity of this country . . . today and into the future," one of the ads stated.

Such statements are apparently aimed at allaying the fears of Canadians about the invasion of a foreign retailing superpower--albeit a friendly U.S. neighbor.

Canadians are firecely patriotic--but price-conscious--and fear further domination or erosion of their national identify, living in the shadow of the United States.

It's such emotions that have prompted Zellers Inc., Canada's largest discount chain owned by Hudson Bay Co., to run televison ads showing the image of a Canadian flag blowing in the breeze behind a list of prices being slashed. Zellers also reminds Canadians it has been serving them since 1931. But surveys have shown that price will always win out over patriotism.

Other major retailers, including Kmart Canada Ltd., and some supermarket chains such as Zehrs Stores in the Loblaws group have suddently begun using "greeters." Department store chains, including Eaton's, have been making significant price reductions.

While few chains have publicly acknowledge that they're changing the way they do business because of Wal-Mart's arrival, Sears Canada Inc. has boldly announced plans to reinvent itself to compete.

Donald Shaffer, Sears Canada president and chief executive officer, said at the company's annual meeting that the department store chain will distance itsel from competitors such as Wal-Mart by switching to more upscale fashions, home decor and a wider range of appliances.

Wal-Mart's arrival in Canada represents a "seismic change" in retailing, Shaffer said, after unveiling a refurbished store in Laval, Quebec, in suburban Montreal. He believes the two companies can co-exist after a period of adjustment since they won't be competing head-on in every category.

"Our best estimate is that we're in the same range of 20 to 25% of merchandise. About 35% of their products we don't carry at all -- mainly health and beauty aids and foodstuffs," he said.

Sears Canada is following its U.S. parent's five-year-old lead by moving into brand names for home and kitchen appliances and electronics such as General Electric, KitchenAid and Amana, but will retain its Kenmore and Craftsman private labels. Sears Canada will also promote itself as having more upscale fashions to appeal to younger shoppers.

Financial analyst Denyse Chicoyne, vice - president of Nesbitt Thomson Inc., warned that many Canadian companies and discount sotres will face lower profits and some will disappear because of Wal-Mart's arrival.

Profit margins will be in permanent decline by one to three percentage points in Canada's $10 billion discount store market, she said. Hit hard will be Zellers, Kmart, BiWay Stores, owned by Dylex Ltd., and Canadian Tire Corp. Also concerned are drugstore chains since every Wal-Mart store will have a pharmacy charging dispensing fees as low as $1 compared with the current Canadian average of $10.