When expanding internationally, companies have to fully consider the different cultural consumer behavior that exists in different countries. Companies often choose countries that are similar culturally so that they don’t have to make drastic changes to their strategy or operations. In this case, Target figured that expanding from the United States to Canada would be a relatively easy expansion. Both countries were close in proximity and they share a language. Target was able to take over 220 leases from a discount chain called Zeller’s that was closing down. This huge expansion was definitely zealous as they planned for a massive amount of stores instead of expanding slowly with a few stores at a time. Target’s strategy was a big investment and gamble that they took hoping for a big payoff.
During their expansion, Target had to focus on two different customers: those that were familiar with the Target brand and those that were not. Many Canadians were already used to travelling across the border to visit Target stores in the United States, so they were familiar with the Target brand. This created a big issue with many of their stores because they were not as nice, as stocked, or as well located as those just across the border. This created an issue for shoppers because they would much prefer just going to the Target’s in the United States. For shoppers that needed to be introduced to the brand, Target vastly underestimated how savvy these shoppers were when it comes to saving money. Wal-Mart, Costco, Giant Tiger, and Sears were already big players in Canada, so Target was already at a disadvantage. Canadian shoppers also were willing to go out of their way slightly to save some money. There were heavy complaints that the same products at Target were cheaper in the US than in Canada, so shoppers would simply go to US locations.
Target’s takeover of Zeller’s seemed like a great opportunity, but it definitely backfired and was a major factor in Target’s failure. To begin, these stores were not in good locations. They were oftentimes in run down shopping centers that were difficult to access for consumers. In addition, their layout inside was not ideal for Target shoppers. They were much smaller than traditional Targets were, and it was much more costly to expand and transform them into the red/white branded store that aligns with Target’s brand. The organization within the store also left much to be desired. Shoppers found the stores very disorganized. This showed that Target did not take into mind the consumer behavior of Canadian shoppers. The layouts of the store should have been thoughtfully designed to appeal to the specific Target consumer. This is another example of Target failing to properly analyze the different cultural consumer behavior that exists in different countries. They simply assumed that they could enter the market with their reputation and be successful without the proper planning.
This international expansion was an utter failure for Target because they did not understand the cultural differences that exist between shoppers in the United States and Canada. This truly highlights the importance of understanding cross-cultural behavior because this happened with a company expanding into a country with a relatively similar culture. Expanding to a much more diverse country poses even more of a challenge that requires intense thought and planning in order to be successful.