TARGET

Below is a comprehensive overview of reasons which led to Target's failure in Canada from
provided websites, following is the SWOT analysis of it.
Farnaz Seyedi
Mohsen Adami

https://www.visioncritical.com/blog/target-canada:
 Less than two years after entering Canada, Target shocked the retail world by pulling out.
After accumulating $2.5 billion in losses, the Minneapolis-based company will shut
down all of its 133 Canadian locations and lay off 17,600 employees
 In fact, using Vision Critical’s customer insight platform in 2012, we found that over
half (52%) of Canadian shoppers who were aware of Target at that time were excited
that the retailer was coming.
 Some experts point to the weak Canadian dollar as a contributing factor.
 Others believe Target underestimated the power of Wal-Mart Canada
 Managers found 89% of Canadians thought Target didn’t live up to its tagline, “Expect
More. Pay Less.” 53% thought Target stores in Canada were inferior to US stores when it
comes to offering low prices.
 40% of the shoppers we engaged said that the shopping experience in Target Canada
was not as great as their experience in the US.
 It failed to create an adequate distribution system, which prompted customers to
complain online about low inventory
 Our 2015 study shows 41% of Canadians thought Target Canada was not as good as
Target US when it comes to apparel selection
 Today’s retailers need to truly understand their customers—not just what they are buying
but why they are buying.

https://www.macleans.ca/economy/business/what-really-happened-at-target-
canada-the-retailers-last-days/
 The company was having trouble moving products from its cavernous distribution centres
and onto store shelves, which would leave Target outlets poorly stocked.
 Under Steinhafel, the company paid $1.8 billion for the leases to the entire Zellers chain
in 2011 and formulated a plan to open 124 locations by the end of 2013. Not only that,
but the chain expected to be profitable within its first year of operations
 It was an open secret that Target was interested in the Canadian market. But the company
had previously decided it wanted to grow as quickly as possible if it were to enter
Canada, rather than pursue a slow, piecemeal expansion.
 By using Target’s existing technology, employees in Canada could draw on the large
amount of expertise in the U.S. That plan had shortcomings as well. The technology was
not set up to deal with a foreign country, and it would have to be customized to take into
account the Canadian dollar and even French-language characters. Those changes would
take time—which Target did not have. A ready-made solution could be implemented
faster, even if the company had little expertise in actually using it.
 The team responsible for the decision went with a system known as SAP, made by the
German enterprise software company of the same name, After implementing SAP in
Canada, Target wanted to eventually switch the U.S. operations over as well, aligning the
two countries and ensuring the entire company benefited from the latest technology.
Target believed the problems other retailers faced were due to errors in data
conversion. Those companies were essentially taking information from their existing
systems and translating it for SAP, a messy process in which it’s easy to make mistakes.
 Strange things started happening in 2012, once ordering began for the pending launch.
Items with long lead times coming from overseas were stalled—products weren’t fitting
into shipping containers as expected, or tariff codes were missing or incomplete.
Merchandise that made it to a distribution centre couldn’t be processed for shipping to a
store. Other items weren’t able to fit properly onto store shelves. The data contained
within the company’s supply chain software, which governs the movement of inventory,
was riddled with flaws. Product dimensions would be in inches, not centimetres or
entered in the wrong order: width by height by length, instead of, say, length by
width by height
 The company had purchased a sophisticated forecasting and replenishment system made
by a firm called JDA Software, but it wasn’t particularly useful at the outset, requiring
years of historical data to actually provide meaningful sales forecasts
 The depots were hampered by other factors, caused by lingering data problems and the
learning curve associated with the new systems. Manhattan, the company’s warehouse
software, and SAP weren’t communicating properly.
 The auto-replenishment system, which keeps track of what a store has in stock, wasn’t
functioning properly. Much of that data was still incorrect, and therefore the system
couldn’t be relied upon to make accurate calculations.
 the point-of-sale system was malfunctioning. The self-checkouts gave incorrect change.
The cash terminals took unusually long to boot up and sometimes froze. Items wouldn’t
scan, or the POS returned the incorrect price
 According to one former employee, there was a misunderstanding about shipping
dates
 The chief complaint among shoppers was higher-than-expected prices. Many
Canadians, it seemed, were disappointed when they discovered that boxes of cereal and
cute area rugs cost more than they did in the United States
  its rapid roll-out, designed to quickly achieve scale in the Canadian market, had the
unintended effect of limiting the impact of new store openings in some cities. Total
cumulative operating losses for the Canadian operation is estimated to be $2.5
billion

https://slate.com/business/2015/01/target-closing-in-canada-these-pictures-show-
why-it-failed.html
 Target opened 124 stores at once in 2013. Rather than build its own real estate, it
purchased leases on buildings that had belonged to Zellers, a “dying low-end retailer,”
 The end result: understocked, uninviting stores that couldn’t even compete on price with
Walmart, which began offering discounts to undercut its rival. Target seems to have
realized that with all the damage already done, it wasn’t going to recover.

https://fortune.com/2015/01/15/target-canada-fail/
 Location, location, location: the reality is that most Zellers stores were dumpy, poorly
configured for Target’s big-box layout, and were in areas not frequented by the middle
class customers Target covets
 Empty shelves: Opening 124 stores within such a short period of time led to havoc with
inventory planning, causing a big problem with stock outs early on, disappointing
shoppers expecting to see the same abundance they would see cross-border shopping in
the United States
 Aggressive Wal-Mart pricing: Target has admitted it hadn’t offered sharp enough
pricing, creating a perception thing were more expensive than necessary there and
annoying customers.

https://www.canadianbusiness.com/the-last-days-of-target-canada/
 Hiring was a top priority. Target has a unique, well-established corporate culture in the
U.S., which the company views as one of the reasons for its success, and leaders sought
to replicate that environment here. Target describes itself as “fast, fun and friendly,” to
work for and it’s a place where attitude and soft skills are of equal—if not more—
importance to experience. “Target’s motto was they could train you for the job, but
they couldn’t train culture,” says a former employee.
 young staff received only a few weeks of training, The Canadian team lacked the
institutional knowledge and time to properly mentor the new hires.
 Target used groceries as a traffic driver in the U.S. and attempted to replicate that
strategy here, failing to fully realize how competitive the category is in Canada.
  by the latter half of 2014, Target could finally have some confidence that the right
products would arrive at the right times, greatly improving the in-stock position of the
stores—particularly during the all-important holiday season. Indeed, during December
and January 2015, Target employees were beginning to feel like there was a light at the
end of the tunnel. The company had a much better handle on its technology, its data and
the supply chain, and every day no longer felt like a crisis. Target Canada was at last
transitioning into a functional—almost normal—retailer. There were even big plans for
2015, such as implementing online shopping at Target.ca.

SWOT Analysis

Target’s Strengths (Internal Strategic Target’s Weaknesses (Internal

Factors) Strategic Factors)
 Wide Range of Merchandise  Inefficient System of Distribution
 Market Presence  Ineffective Inventory Management
 Brand positioning  Weakness of operation management
 Strong expertise in marketing  Customer shopping experience
 Lack of international experience
 Human Resources Training
 Is not as large or as diversified as other
retail giants, including Walmart, & Costco

Target’s Opportunities (External Target’s Threat (External Strategic

Strategic Factors) Factors)
 International expansion  Changing Customer Preferences
 E-commerce  Strong Canadian competitors Like
 Expand Private-Label Brands Loblaws, Costco, …
 The weak Canadian dollar
 Online retailers, particularly Amazon.com