Global Marketing

Introduction & Failure of Target in Canada

Introduction to our Blog Pair

Hello, our names are Augustin and Emily. We both attended CSUN Nazarian School Business for our undergrad. Augustin with a BS in Business Administration in Management and Emily with a BS in Business Administration in Marketing. During the pandemic, we both decided that the best way to busy and sustain our competitive advantage was to attend Chapman for our MBA. We both value education and love learning more especially when it comes to business. Both of us have dreams and aspirations to work for companies that are known globally. Our subject we will be discussing throughout the semester is international retail. We look forward to sharing our research of failed attempts, successful strategies, and important information to consider retail internationally.

Target's Move to Canada and Why they Failed

Too Much, Too Fast

Target began its venture into Canada by acquiring 220 Zeller stores. Target's lofty goals were unprecedented and bold, to say the least. The move to Canada happened quickly, which hindered the quality of their new stores. They opened their stores with very little in mind about their Canadian customers. The focus seemed to be on beating Walmart, who gained a substantial market share in Canada over the years. A better goal for a company like Target would have been to focus on service and products that would attract Target fans and Canadian newcomers. Target's high prices, contrary to the American stores, led the company to retreat out of Canada. When entering a new country, two things need to happen—tremendous research and some autonomy among managers. Allowing managers to make decisions on a local level allows international stores to adapt to local needs. Target's high prices forced Canadians to disassociate Target from affordable or fair, leading the new customers to Walmart, who delivered on their low prices.

Location, Location, Location

90% of Canadians live close to the border. When going into Canada, Target knew there was a high awareness from Canadian consumers and that many had visited US locations. Canadians frequently come into the US to buy groceries and look for deals. When Target arrived in Canada they realized that the product selection were not the same and quality was not up to the same standard as the US. The reputation of Target in the US is that it is lower-priced clothing, housewares and other goods that appeal to a more upscale, affluent American Shopper. The perception is that it is of higher quality than Walmart with reasonable prices. This did not translate into the Canadian market.

Supply Chain Issues

Quickly after the opening of stores there came many reviews mentioning that the shelves were left frequently unstocked. Customers complained of shortages of basic goods. There were clearly supply and distribution issues. Keeping stores stocked is crucial to being successful and Target should have been able to plan this in advance to entering Canada. Shoppers also said that prices were too high. Canada locations did not competitively price their products.

Canada, it's not the same…

The nature of the consumer in Canada changes vastly as you change regions. Target didn't realize that how Canada was so different than the US. Some people assume that Canada is very similar to the US because we are so close but there are many different government regulations, supply chains, rules regarding employee benefits, and consumer tastes. I also don't think there was a consideration for the loyalty to Canadian businesses like Dollarama. Canada could be just as challenging as going halfway around the world.

Should Target have entered Canada?

I do think it was a good idea to enter Canada because Target had the money and positive awareness. However, I think there was a massive deficit in the amount of research and planning that went into it. I think they should have started with 5-10 stores to start out initially and then expand from there based on the performance. It is disappointing that this was such a fail because it could have had the potential to be successful if they had a better strategy to execute. They did end up shutting down 133 of the 220 stores and this was smart. This left them fewer to focus on improving. They made sure to only keep the most successful stores and hopefully, they will invest in fixing the layout, knowing their Canadian customers, competing with competitor pricing, and fixing the supply and distribution issues.