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Target is a huge American departmental store chain with over 1926 stores in the United States. It is the 8th largest retailer and was founded on 5th January 1962 by George Dayton and John Geisse. The current chairman and CEO of the company are Brian C Cornell. Target is famous in the US because it provides its customers with a huge range of good quality products. Due to the corporation’s huge size, the company decided to expand to Canada to increase its revenue and profit.
However, Target failed in Canada, and in less than two years after opening, 133 Target stores were shut down. Brian C Connell made this decision because it was determined that Target wouldn’t be profitable in Canada for several years. They failed for numerous reasons like geographical location, stocking issues, design, and checkout services of the store. Target set a goal for themselves that was too ambitious and unrealistic. They couldn’t meet it and were not in a position to compete with markets that had been in Canada a lot longer.
Here are all the reasons Target failed in Canada-
1. Target was too overconfident
Target was very sure of its success in Canada due to the fact that it had created a brand in the USA. They were very ambitious and opened 124 stores in ten months.
They wanted to make a profit within the first year, but this isn’t realistic when you make a huge investment in a new project. They believed that they could count on sales because Target’s success would carry into Canada but this simply didn’t happen.
2. Target rushed to open
Target had invested a lot of money to expand into Canada and wanted to make a lot of profit in turn. They rushed into the whole process without making sure all the requirements were met. They suffered a lot of setbacks that they couldn’t predict because of a lack of planning, supervision, and allotted timing. They didn’t give enough time, attention, and manpower to the problems that they were facing. They opened stores without sufficient stocking and staff and this led to their ultimate downfall.
Once opened, the stores were not fully stocked and the staff was running around in order to fill the empty shelves. They even had signs saying “We’re open (mostly)” which was a clear sign of a company that simply wasn’t prepared.
3. Target hiked the prices of their goods
Target decided to start off their company with goods priced higher than the United States of America. Most of the Canadian population was familiar with the brand and often shopped in the US. However, when they saw that the prices were higher in the Canadian outlets, they stopped purchasing goods. Increasing prices right at the beginning was a poor decision made by the administration which affected their sales drastically. They could have easily prevented this if they had not been in such a hurry to turn a profit.
4. Target didn’t have enough stock
Due to the hurry in starting over 100 branches, Target suffered many supplier and distributor issues. They couldn’t find a way to stock all their outlets as and when needed. They could not transport goods from the distributors to the stores and suffered many issues during this process.
However, they couldn’t meet up with the demand or the expectations because of their stock issues. Shelves of essential household products were understocked, while slow-selling larger goods were overstocked. They could not cater to the everyday needs of the locals so they shifted to the stores they knew best. Their financial and stocking issues were negatively portrayed by the media which further ruined their reputation and decreased the footfall.
5. Target stores opened in poor geographical locations
The reason that Target opened up so many stores so fast was that they decided to take over the locations of defunct retailer Zeller. They paid a lot of money in order to increase the speed of this process and in turn their profits. These Zeller outlets were not located in the best locations, and they were too small for a standardized Target outlet.
They had to invest more money in order to expand the store and also to create the signature red-and-white Target aesthetic. The target couldn’t attract the right demographic and ultimately people stopped coming.
6. Target had a poor checkout system
Target’s technology promised a quick and efficient checkout but the customers did not receive this. Instead, they were faced with several glitches and longer waiting times. The self-service checkouts were slow and often made miscalculations. This resulted in several customers having a bad experience and not returning.
Conclusion
Target clearly had a lot of issues that it should have worked on before opening such a large number of stores. They figured their growth would be easy because of the fact that they were a household name in the USA. However, a new country brings a large number of new challenges that they were not equipped to face. Due to all these reasons, Target failed in Canada and it is unlikely that it will restart this project in the next decade.
