Wal-Mart leads Canadian migration - Wal-Mart Stores Inc - International Retailing

Discount Store News, Sept 5, 1994 by Jim Fox

TORONTO -- Canada's retailers are singing a different tune these days -- in many cases, it's a song not to their liking: the Wal-Mart cheer.

Yes, it's true. About 1,000 Canadian retailers, including a few competitors who face extinction at the hands of Wal-Mart's invasion of the north, stood and clapped out a rousing chorus of the cheer at the annual meeting of the Retail Council of Canada.

The mega-retailer's power of persuasion and group motivation was demonstrated as Bruce West, president of Wal-Mart Canada, egged on those in the audience and led them in a high school style cheer spelling out W-A-L-M-A-R-T and asking the question: Who's No. 1? The customer!"

Some retailers attending the meeting refused to take part, saying they wouldn't be manipulated.

There's no question, however, that Wal-Mart is manipulating the Canadian retail scene since acquiring 122 former Woolco department stores across Canada earlier this year. The deal with Woolworth Corp., estimated at $300 million (U.S.), has sparked the greatest retail upheaval yet to occur north of the border.

Wal-Mart, based in Bentonville, Ark., is just one of several huge U.S. retailing invaders and dozens of smaller chains setting their sights on the land to the north--a country with 27 million people who have grown accustomed to making shopping forays to the United States in search of better selections of merchandise, lower prices and helpful salespeople.

The interest in Canada is prompted by the need for chains to look outside the United States to sustain their growth, a strong U.S. dollar worth $1.38 Canadian, free trade, less competition with fewer malls and megastores, and the close relationship between the two countries with similarities in language and customs (except in mainly French-speaking Quebec).

While it's the best news ever for shoppers, Canadian retailers are trying desperately to meet the challenge posed by the likes of Wal-Mart, Home Depot, Sportmart and many others from the south.

The nationally circulated Globe and Mail newspaper based in Toronto said: "Led by mighty Wal-Mart, with its door greeters and rah-rah attitude, an army of U.S. retailers have launched an invasion vowing to liberate Canadians from a life of high prices and poor service."

Here are the highlights of Canada's newcomers in the northern migration:

* Wal-Mart is spending $200 million (U.S.) to renovate and remerchandise former Woolco stores while actively scouting locations for additional stores. Many of the blue-and-white Wal-Mart signs have gone up at stores in Toronto and southern Ontario over the summer as all traces of Woolco quickly disappear inside.

"Grand openings will start in the fall and run until they're all complete, sometime before Christmas." said Wal-Mart Canada's West, former president of Woolco. New stores already announced will be built in Barrie and Belleville in southern Ontario and in Gatineau, Quebec.

"All I can say is stay tuned, there's more good news coming for many Canadians across the country with increased investment for new Wal-Mart stores," he added.

In order to secure Canadian government approval for a foreign takeover of Woolco, Wal-Mart pledged to showcase Canadian products and plug domestic artistic talent in its ads. The goal is to carry at least 50% Canadian-made merchandise, compared with the 40% previously offered at Woolco. Wal-Mart also has increased the number of employees at the former Woolcos by 2,500 to a total of 18,500 people. No immediate plans have been announced for Sam's Club or Wal-Mart Supercenters in Canada.

* Business Depot, Markham, Ontario, now owned by Staples, Framingham, Mass., was launched in Canada by Canadian Jack Bingleman, who now is president of Staples North America. It has 34 stores in Canada and expects to end the year with 50 units.

* Office Depot, Delray, Fla., the largest office supply superstore chain in the United States, has opened six stores in the Toronto area in the past two years.

* Michaels Stores, Irving, Texas, opened three of its huge arts and crafts supplies stores this summer in southern Ontario and plans a major expansion across Canada.

* Claire's Stores of Florida opened six stores in Canada in April.

* Home Depot of Atlanta has taken over Aikenheads Home Improvement Warehouse chain from Molson Cos. Ltd. and plans to open 12 new stores by the end of the year and 50 within two years. Aikenheads was relaunched in '92 by the Molson brewer based on the Home Depot concept. When the U.S. company set plans to open five stores in Vancouver, Molson sold 75% of Aikenheads to Home Depot and averted the competitive showdown.

* Petstuff of Roswell, Ga., announced recently that it will open four of its pet supply superstores in Toronto this year and eight additional stores in Ontario in 1995. The first Toronto store is expected to open in October.

* Other chains targeting Canada include Sportmart, Circuit City, Computer City, Pay Less Shoes, Fay's Drugs, Burlington Coat Factory, The Limited and TJX Inc. Reports continue to circulate that Target and JCPenney are seriously considering options to migrate north. Among the chains already here are Toys "R" Us, Disney, The Gap/Banana Republic, Electronics Boutique, PriceCostco and Eagle Hardware.