It’s been over three years since Target announced they would be closing Canadian stores and there are many people who are still wondering, “what the heck happened?”
From the outside, it looked like Target had it easy — Canadian consumers highly anticipated the opening and finding locations was made easy with Zellers’ departure. Unfortunately, the hype and ease of finding locations ended up being their biggest pitfalls. A month prior to opening doors in March 2013, the company had difficulties understanding new technologies meant to manage inventory and sales, and even bigger issues moving product from distribution centres to stores, a problem that would follow them until their last day. While a team of 750 head office Target employees worked on the Canadian launch, no one had the guts to man up and say, “this is a disaster.”
Castaldo interviewed a number of employees for the piece, narrowing down exactly what went wrong. Long story short, Target expanded too quickly. The company knew they had issues with inventory before they even launched, but with so many stores leased, the Minneapolis company was under a lot of pressure to get them filled and make them profitable. Over 17,000 Target Canada employees were trained too quickly on systems and technologies head office didn’t even understand and young merchandising assistants weren’t able to implement rigid inventory schedules. However, even after losing $941 million in their first year, the company was still optimistic about the venture.
Target Canada revised their strategy, overstocking ‘busy’ stores and under stocking everything in between. They even issued an apology to Canadian customers promising to improve, though they still faced major issues with understanding inventory flow. By December and January 2015, in-store employees saw improvements but were let down when Target Canada filed for bankruptcy protection on January 15, 2015. The company had spent $7 billion dollars on their expansion and estimated they would not see profit until 2021.
While you may think you know the whole Target story, there is so much more behind it. Joe Castaldo perfectly captures Target Canada’s rise and fall in his detailed piece for Canadian Business.