There have been many lessons learned tracking the successes and failures of retailers attempting to expand north or south of the US/Canada border. It is very surprising that Target didn’t incorporate many of these basic lessons into their Canadian playbook. The list includes;
- Have a successful domestic strategy that can be migrated
- Add strong local talent at the senior level.
- Understand the premium to the US retail that the Canadian customer will bear
- Secure ‘A’ real estate locations.
- Identify a void in the market or be in a position to take share from key competitors.
Target is pulling out of Canada, the retail giant announced Thursday.
The chain plans to close all 133 of its stores in the country, and has received initial Canadian court approval to go through with the liquidation process. The decision comes after a review by company executives found that Target Canada wouldn’t become profitable until at least 2021, according to a statement by Brian Cornell, the company’s CEO.
“We have determined that it is in the best interest of our business and our shareholders to exit the Canadian market and focus on driving growth and building further momentum in our U.S. business,” Cornell said in the statement, noting that it was “a very difficult decision.” About 17,600 people work at Target Canada.
Target expanded into Canada in 2013 and has been plagued by problems ever since. Canadian shoppers were greeted with empty shelves during Target’s first few weeks of operation in the Great White North as the chain couldn’t keep up with demand. Shoppers also complained that prices at the big-box store were too high.
Despite efforts to slash prices — Target Canada eventually became cheaper than Walmart, according to one study — and fewer inventory problems, Target’s botched first few weeks in the country left a bad impression and it’s been difficult to turn sales around. After a little more than a year in the country, Target had lost more than $1.5 billion in Canada.
Executives were hoping the holiday season, a crucial time for retailers, would give Target Canada a boost, but Cornell said performance wasn’t good enough to convince executives it made sense to stay in the country.
“Simply put, we were losing money every day,” the CEO said in a Q&A on Target’s website.
The Canada exit comes as Target is struggling in the United States as well. Once a favorite of middle-class shoppers looking for hip items on the cheap, Target is still working to regain trust after a massive credit card hack at the end of 2013 that compromised personal information of up to 70 million customers.
The chain is also suffering from some of the same ills plaguing other big-box stores. With shopping sites like Amazon and drugstore and pharmacy chains offering many of the same products in a more convenient setting, Target and others are struggling to lure shoppers out to the suburbs and into their stores.
Under the direction of Cornell, who became the company’s CEO in July 2014, Target has tried to fight back, offering free shipping during the holiday season and launching a line of smaller stores in urban areas. Target is also getting back to its roots, focusing more on efforts like designer collaborations, which have led some to nickname the chain “Tar-zhay.”
This article originally appeared in huffingtonpost.com.