The recent opening of Target's first stores in Canada is generating consumer buzz, but several of the country's leading retailers say the arrival of the U.S. giant has so far had a limited impact on them.

Supermarket chains Metro Inc. (TSX:MRU) and Empire Co. (TSX:EMP.A) said Target's offerings so far have mainly been in dry groceries and that prices are similar to the discounted levels already seen in Ontario's highly competitive market.

"The pricing is at or about the discount pricing in the market so we didn't see price disruption coming from Target so far but it's early," Metro CEO Eric La Fleche told CIBC's retail conference on Thursday.

Just weeks after the first Target stores opened, some Metro stores have seen traffic increase while other have lost some grocery sales. However, La Fleche said it was too early to tell what the impact of Target has been.

Discount shopping has been a key growth trend over the last five years as financially stretched consumers search for bargains, putting pressure on retailers to offer deep promotional discounts. Almost half of sales in Ontario have been at discount, while sales at discount banners in Quebec account for 35 per cent of the total, equal to the Canadian average.

Wal-mart's ongoing expansion of supercentre stores that also sell fresh and frozen food has made life tougher for its rivals.

"(But) we're well-positioned in this mature industry," La Fleche said. "Clearly the discount square footage growth that's happened and continues to happen is a challenge but we've met challenges before (and) we will continue to meet these challenges head on,"

Empire, which operates Sobey's and the Freshco discount banner and is a wholesaler of some products for Target, said the competitor's arrival has actually increased consumer traffic to its nearby locations.

"We believe our differentiated food offering will allow us to continue to convince customers that although there are opportunities to serve parts of their grocery needs at other players, that if you are looking to do a full grocery shop in this country we are still the best full-service provider in order to meet those customer needs," chief financial officer Paul Jewer told the conference.

Canadian Tire (TSX:CTC) said it has been preparing for heightened competition by renovating stores, adding new formats, introducing new technology and preparing to launch online shopping later this year.

Two years ago it reviewed its outdoor living category and made changes to appeal to consumers. A similar opportunity exists in hunting, fishing and tools.

"We believe we can improve our execution and our offering to our consumers to keep us the top of mind," said Marco Marrone, chief operating officer.

CIBC World Markets said discount department stores are poised to take more market share in the coming year as debt-conscious consumers and relatively stagnant wage growth weighs on retail spending.

"Canadians have heard the message from Ottawa: be careful what you borrow for. But turning more prudent on debt accumulation has meant leaner times for retail spending growth over the last year," chief economist Avery Shenfeld wrote in a report published for the conference.

Retail sales grew just 2.5 per cent last year marking the second year of decrease from the 5.6 per cent growth in 2010 when Canadians were more eager to borrow at low rates to finance their shopping sprees.

Disposable income gains will likely remain modest this year.

"In that climate, discount stores will continue to grab market share, particularly given the entry of a major U.S.-based player this year," Shenfeld said.

After a peaceful and prosperous decade for Canadian retailers, large U.S. retailers including Target, Nordstrom and international specialty retailers are beginning to offer some competitive disruption, added CIBC analyst Perry Caicco.

These developments "will test the resolve and resiliency of Canadian retailers, large and small" for the next few years, he said. However, he said the competition will "make it a good time to be a consumer as choices will continue to expand and prices will come down."

Earlier, Tim Hortons CEO Paul House told the conference that it doesn't believe the growing popularity of single-serve coffee makers such as Keurig and Tassimo will hurt sales of its store-brewed beverage.

Despite its strong market share in Canada, House said the ubiquitous chain still has room to grow, especially in Quebec, Western Canada, parts of Ontario and in major urban markets.

It plans to add up to 180 locations this year and improve the drive-thru efficiency of about 1,000 stores.

Tim Hortons (TSX:TMI) is also expanding its presence in the United States, where it operates in 11 states, primarily in New York, Ohio and Michigan. The company's strategy is to increase the density of locations in key markets to provide consumers with more choice, derive more bang from its marketing spending and gain efficiencies.

Meanwhile, House said a permanent chief executive will be named by summer so he can retire about two years after he returned to the position when then-CEO Don Schroeder abruptly left the company.

As of Dec. 30, Tim Hortons has 4,264 system-wide restaurants, including 3,436 in Canada, 804 in the United States and 24 in the Gulf Co-operation Council.

News from © The Canadian Press, 2013