Target may narrow profit margins for small grocers

An economist says the opening of Target in Thunder Bay next week will have a mixed impact on the local business community.

Armine Yalnizyan, the senior economist with the Canadian Centre for Policy Alternatives, said the store will likely create more walk-in traffic and sales for small retailers at the Intercity Shopping Centre.

But with Target's focus on groceries and essentials, small local retailers will feel the competition, she said.

"But it really makes … small grocers get sweaty palms because the last thing … people need is even smaller margins in the food industry."

Yalnizyan, who is also regular business commentator on CBC, has been studying the launch of Target into Canada.

She said in other locations already up and running in Canada, sales have outstripped expectations, leaving shelves empty.

"If a similar experience happens in Thunder Bay, as has happened elsewhere, you had better get in there early because people seem to like the products they have at the price point," said Yalnizyan.

Selling out of stock is challenging for companies like Target because it is difficult to deliver stock to stores in a timely way, she added, noting that for it takes about a year for products to come from Bangladesh, China and Romania once they are ordered.

Yalnizyan said some Target locations in Canada are already laying off staff because they don't have enough stock for customers, and warned this could happen in Thunder Bay as well.

"You've got a real wow in hiring and firing, which is very challenging for small communities like Thunder Bay that have an elevated unemployment rate," she said.

The chain is set to open its Thunder Bay location on July 16.