NEW YORK (TheStreet) -- Target's (TGT) Canadian business has been a major headache for the Minneapolis retailer ever since it opened in March 2013, and a recent pricing survey suggests that rather than boosting sales, the decision to lower prices to attract customers has only generated less revenue than expected.
According to research firm Kantar Retail, an identical basket of consumer goods in August cost 3.9% less at Target Canada than at Walmart's (WMT) Canadian business. The sample basket was made up of 33 identical national brand goods from edible and non-edible grocery and health and beauty categories at Walmart and Target stores within five kilometers of one another in Toronto. Kantar Retail found that 36% of the 33 items at Target were on sale compared to one item at Walmart.
When reached by phone, a spokesman for Target downplayed the Kantar Retail survey, noting that the company "tries to price within 1% to 2%" of the lowest price for a product in the market, which is "usually Walmart." He added "there is nothing new" regarding pricing thus far for Target Canada in the third-quarter relative to statements the retailer made on its second-quarter earnings call.
On that call, Target's chief merchandising and supply chain officer, Kathee Tesija stated: "On pricing, while both our own studies and external surveys show that we are already priced very competitively, the team has made decisive changes to ensure we respond even more quickly to pricing dynamics in the Canadian marketplace, including comparison shopping our prices vs. competitors on more items more frequently, implementing enhanced tracking of competitor promotions to ensure we react quickly, and implementing a price match policy, which includes online and local competition with a more flexible process for guests."