The Great Canadian Target Flop
All- Hail Target
Growing up in the city of Toronto, I eagerly awaited our annual family vacations to Florida. While I enjoyed the beach, what I most looked forward to as I stepped of the plane was shopping at Target. The concept never ceased to amaze me- endless aisles of everything from clothing, home décor, activities, and a snack selection that can only be found at Target. The end of each vacation would often result in needing to purchase another luggage to bring back all of my Target finds, as these items were never to be found in Canada. In 2013, my prayers were answered when Target announced that it was finally entering Canada and opening 124 locations.
However, the excitement was short lived, when each trip to Target Canada offered empty shelves, limited product selection, and disappointment consumers leading to its Canadian demise just two years after opening. Target’s withdraw from the Canadian market demonstrated that sometimes a successful business just can’t cut it in a foreign market.
A Strong Vision with Poor Execution
In Target’s annual report following the closure, the CEO at the time Gregg Steinhafel highlighted Target’s “two years of exceptional dedicated and hard work” to prepare for their overseas expansion. He mentioned the market entry was rushed, oversized, and too ambitious with opening 124 stores within ten months.
Canada was an appealing target for growth because of its geographical location, English speaking residents, and relatively similar culture. Upon arrival, Target faced two types of consumers: those already familiar with the retailer from U.S. encounters (like myself), and those completely new to the brand. At their launch, Target was successful in releasing a multiplatform campaign using TV, print media, billboards, and social media to showcase their arrival. They introduced themselves as the new neighbour (even localizing the spelling), but their execution was flawed. A major error was that Target failed to recognize the many competitors in the Canadian discount sector which is saturated with players such as Walmart, Costco, Giant Tiger, and Canadian Superstore. Not only are there many players in the industry, Canadians have become loyal to their preferences and were not looking to change their behavior.
They Just Missed the Target
Along with many smaller issues with Target Canada, the primary difference that led to its failure was the significant quality differences between the U.S. locations and the Canadian stores. The stores also experienced constant stock- outs and supply issues leading to empty shelves, low quality products, and high prices for the majority of shoppers. For the Target- familiar consumers, this was hugely disappointing, and the new consumers were not convinced of the Target charm. Additionally, Target failed to understand the difference in consumer behavior between American and Canadian consumers. Canadian consumers don’t think and shop the same way as their American counterparts. For example, compared to American consumers, Canadians are perceived to be value shoppers, seeking the lowest price as opposed to a specific brand. So, when Target failed to offer lower prices or unique products- Canadian consumers weren’t interested.
Ultimately, Target was unable to replicate the magic they created in the U.S. and failed to win over Canadian consumers. Just two years after opening, Target closed all 124 of its Canadian stores.
Improvements
Target was overly ambitious to open 124 Canadian stores at the start of their Canadian presence, prior to even ensuring they could replicate the experience consumers had in the U.S. Once they realized the distribution and supply chain issues, along with the challenges of winning over the Canadian consumer, they experienced these issues x124.
Target could have mitigated the losses they experienced from the Canadian expansion by slowly entering Canada with a small number of locations to test the market. Additionally, in order to compete with competitors already in the Canadian market, Target needed to differentiate themselves to win over consumers. For example, offering U.S. products that were exclusively be found at Target. Had Target been able to replicate the experience in the U.S. while keeping in mind the preferences of the Canadian shopper, they likely would have found success.
