Dive Brief:

• Target Corp. is getting closer to ending its debacle-laden entry into Canada with an agreement with a major lessor announced Monday.

• The retailer reached a settlement with RioCan Real Estate Investment Trust over 18 leases it had abandoned when it left the Canadian market earlier this year.

• Less than two years after opening its first Canadian store, Target surprised the retail industry by closing of all of its 133 locations in Canada as part of a turnaround effort initiated by CEO Brain Cornell. 

Dive Insight:

Target’s exit from Canada will cost it some $5.4 billion in pre-tax losses and has left 17,600 people without jobs there.

Canada was likely an attractive place to set up Target stores in part because consumers there tend to shop in brick-and-mortar stores more and online less compared to American shoppers, in part because prices, and shipping, are often higher. Stores in malls see 20% more sales per square foot than in the States.

But any tolerance of higher prices in Canadia is likely overtaken by the higher costs of retail operations there. The minimum wage is higher, taxes are higher, and, because distances are greater between populated areas, distribution costs are higher. In some areas, signs and consumer information must be provided in English and French, sometimes with the French more prominent, another costly task for some retailers. 

Many Canadians already shopped in Target stores stateside before the retailer’s entry there, and were taken aback by the Canadian stores’ higher prices and their lack of assortment.

“With the benefit of hindsight, looking back, we took on a little too much, much too fast,” Molly Snyder, spokeswoman for Target, told Retail Dive in an interview earlier this year after Target announced that it was pulling out of Canada. 

Target is actually reopening its operations in Canada, sort of, with a new website that allows Canadians to order goods. But the site has prices much higher than what’s found in Target’s stores and website in the U.S., and the move has prompted observers to once again question Target’s approach to Canadian shoppers, who are able to buy through Amazon with the kind of lower prices and shipping rates that online shoppers have come to expect.