How was Target’s aim so bad?

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This article was published 16/01/2015 (3942 days ago), so information in it may no longer be current.

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So, where did Target go wrong in less than two years in Canada?

Let us count the ways.

Buying second- and third-rate locations from Zellers? Check.

Having significantly different prices at stores on either side of the border? Check.

Biting off more than it could chew with more than 130 stores? Double check.

Since the Minneapolis-based retailer arrived in Canada 22 months ago — it came to Winnipeg in May, 2013 — there has been a never-ending stream of bad news.

Missed sales projections and distribution problems led to empty shelves and a growing ocean of red ink. So, while the timing of Target’s demise surprised some, its demise didn’t.

Brian Yarbrough, St. Louis-based senior consumer analyst at Edward Jones Investments, said Target opened too many stores and had too many distribution centres, which led to supply chain issues, empty store shelves and angry shoppers.

“When you make a big splash like this, frustrate the consumer and drive them away, it’s an uphill battle to bring them back. They decided it wasn’t a battle they wanted to fight because they thought they’d never generate acceptable returns,” he said.

Toronto retail analyst John Winter agreed. He said customer complaints about price discrepancies between U.S. and Canadian stores dealt Target’s stores on this side of the 49th parallel a serious blow.

“In the U.S., they had an advertising slogan, Expect More, Pay Less. In Canada, it was ‘expect more, pay more.’ That’s not a winning slogan and not a winning strategy when you’re going up against Walmart and their everyday low prices,” he said.

Sandy Shindleman, president of Shindico Realty, which is co-developing the land formerly occupied by Canad Inns Stadium with Cadillac Fairview, which includes Target’s newest store, said Canadians never warmed to Target.

“If Target would have given Canadians the experience, price, quality and selection that they gave them in the U.S., they would be flourishing. The Target that failed isn’t the Target that Canadians know and love,” he said.

The fact that Target’s arrival was anything but a surprise — it bought the Zellers leaseholds in 2011 and didn’t arrive until 2013 — gave competitors such as Costco and Walmart plenty of time to prepare, said Michael Benarroch, dean of the I.H. Asper School of Business at the University of Manitoba.

“They knew that Zellers was going out of business. I think Target absolutely and completely missed the mark and didn’t provide its customers with what they wanted,” he said.

Target’s complete lack of success will mean other retailers, primarily American ones, will be careful before they commit to coming to Canada, Benarroch said

“I’m sure they will be cautious on this just because of Target’s experience. In the short term, the cheaper dollar won’t help companies that sell mostly goods not produced in Canada because they’re all imported goods,” he said.

However it all plays out, it’s going to be awhile before the Target stores are filled with new retailers. First of all, they’re going to have to liquidate all of their stock, which could take a couple of months. Then, once new tenants are found, they’re going to remodel the spaces to their own liking.

geoff.kirbyson@freepress.mb.ca

Archival video: New Target store at Kildonan Place - May 6, 2013

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