1/24/2017 The Last Days of Target

THE LAST DAYS OF TARGET

The untold tale of Target Canada’s difficult birth, tough life and brutal death
by Joe Castaldo; Photographs by Johan Hallberg-Campbell

由于供应链问题、技术困难以及管理层的经验不⾜

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The grand opening of Target Canada was set to begin in one month, and Tony Fisher
needed to know whether the company was actually ready. In February 2013, about a dozen
senior-level employees gathered at the company’s Mississauga, Ont., headquarters to offer
updates on the state of their departments. Fisher, Target Canada’s president, was holding
these meetings every day as the launch date crept closer. The news was rarely good. The
company was having trouble moving products from its cavernous distribution centres and
onto store shelves, which would leave Target outlets poorly stocked. The checkout system
was glitchy and didn’t process transactions properly. Worse, the technology governing
inventory and sales was new to the organization; no one seemed to fully understand how it
all worked. The 750 employees at the Mississauga head office had worked furiously for a
year to get up and running, and nerves were beginning to fray. Three test stores were slated
to open at the beginning of March, followed shortly by another 21. A decision had to be
made. Fisher, 38 years old at the time, was regarded as a wunderkind who had quickly
risen through the ranks at Target’s American command post in Minneapolis, from a lowly
business analyst to leader of a team of 400 people across multiple divisions. Launching the
Target brand in a new country was his biggest task to date. The news he received from his
group that February afternoon should have been worrying, but if he was unnerved, Fisher
didn’t let on. He listened patiently as two people in the room strongly expressed reticence
about opening stores on the existing timetable. Their concern was that with severe supply
chain problems and stores facing the prospect of patchy or empty shelves, Target would
blow its first date with Canadian consumers. Still, neither one outright advocated that the
company push back its plans. “Nobody wanted to be the one to say, ‘This is a disaster,’”
says a former employee. But by highlighting the risks of opening now, the senior
employees’ hope was that Fisher would tell his boss back in Minneapolis, Target CEO
Gregg Steinhafel, that they needed more time.

“Nobody wanted to be the one to say, ‘This is a disaster.’”

The magnitude of what was at stake began weighing on some of those senior officials. “I
remember wanting to vomit,” recalls one participant. Nobody disagreed with the negative
assessment—everyone was well aware of Target’s operational problems—but there was
still a strong sense of optimism among the leaders, many of whom were U.S. expats. The
mentality, according to one former employee, was, “If there’s any team in retail that can
turn this thing around, it’s us.” The group was riding a wave of momentum, in fact. They
had overcome seemingly endless hurdles and worked grueling hours to get to this point,
and they knew there were costs to delaying. The former employee says the meeting
ultimately concerned much more than when to open the first few stores; it was about the

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entirety of Target’s Canadian launch. Postponement would mean pushing back even more
store openings. Everyone else in attendance expressed confidence in sticking to the
schedule, and by the time the meeting concluded, it was clear the doors would open as
promised. “That was the biggest mistake we could have made,” says the former employee.
Roughly two years from that date, Target Canada filed for creditor protection, marking
the end of its first international foray and one of the most confounding sagas in Canadian
corporate history. The debacle cost the parent company billions of dollars, sullied its
reputation and put roughly 17,600 people out of work. Target’s arrival was highly
anticipated by consumers and feared by rival retailers. The chain, whose roots stretch
back to 1902, had perfected its retail strategy and grown into a US$70-billion titan in its
home country. Target was a careful, analytical and efficient organization with a highly
admired corporate culture. The corporation’s entry into Canada was uncharacteristically
bold—not just for Target, but for any retailer. 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. Why Target Canada collapsed has been endlessly dissected by
analysts, pundits and journalists. But the people who know what happened best are the
employees who lived through the experience. On the first anniversary of the company’s
bankruptcy filing, Canadian Business spoke to close to 30 former employees in Canada
and the U.S. to find out how Target, one of the best retailers in North America, got it so
wrong in Canada. (Target declined to comment on specific issues, pointing to previous
statements it has made on its Canadian venture. The former employees interviewed for
this story requested anonymity to preserve relationships in the industry.) Even those
employees remain baffled by how Target Canada collapsed. But what emerged is a story of
a company trapped by an overly ambitious launch schedule, an inexperienced leadership
team expected to deal with the biggest crisis in the firm's history, and a sophisticated
retail giant felled by the most mundane, basic and embarrassing of errors.

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In the fall of 2013, hundreds of Target Canada head office staff piled into the auditorium
at the Mississauga Living Arts Centre for a state-of-the-union address from their leaders.
The employees were weary and frustrated by this point. The bulk of the 124 stores had
opened, and it was clear the launch had gone seriously awry. Consumers were frustrated
when confronted with empty shelves, and the media and financial analysts were
hammering the company for it. On stage, Fisher stated his conviction that Target Canada
was making progress and that 2014 would be a greatly improved year. A Q&A session
followed; one employee bravely asked Fisher what he would do differently if he could do
the launch over again. A man in the front row stood up and offered to field the question.
Taking the microphone, Steinhafel, Target’s CEO, didn’t hesitate with his answer: He
would renegotiate the real estate deal that facilitated the company coming to Canada in
the first place.

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That deal started with Richard Baker, the executive chairman of Hudson’s Bay Co.
Although Baker is a retail executive, he is, at heart, a real estate man. His maternal
grandfather started buying and selling real estate in New York City in 1932 and helped
pioneer the concept of shopping malls. Baker’s greatest business insight was to recognize
the value of the property developed by both his grandfather and father. In the 1990s, he
started selling some of it off to various companies, including Walmart. That relationship
proved fortuitous in late 2010, when Walmart approached him and offered to buy the
Zellers chain from HBC. Baker realized there was more value to Zellers’ real estate than to
the operation itself, since Walmart had soundly beaten the brand. An astute deal maker,
Baker and his team reached out to Target to stoke the company’s interest. (Baker, through
a spokesperson, declined to comment.) 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. The challenge was in acquiring enough real estate to make that possible. The
Zellers sale provided just such an opportunity. After Baker’s team let Target know Zellers
was on the block—and Walmart was interested—the American company acted quickly to
finalize its own offer. Walmart would eventually back out, but Target put down $1.8
billion. Steinhafel bought everything, essentially committing the company to opening
stores as quickly as possible to avoid paying rent on stores that weren’t operational and
leaving landlords without anchor tenants. The price Steinhafel paid raised eyebrows.
“When the numbers got up as high as they did, we found that pretty surprising,” says
Mark Foote, the CEO of Zellers at the time. But Steinhafel may have felt justified in
making such a bold move. In the three years since he was appointed CEO, he’d boosted
revenue 8.3%—not a huge number, but an impressive one, considering the U.S. was
experiencing the worst recession since the Great Depression. Steinhafel had joined Target
in 1979, and his entire professional career had been spent with the company. Target
experienced steady growth during that time, and Steinhafel had simply become
accustomed to succeeding. “The company had never really failed before,” says a former
employee who worked in both the U.S. and Canada. There was no reason to think Target
wouldn’t be able to pull this off.

“There was a clock that was ticking. And that clock was absurd.”

Almost immediately, employees in Minneapolis were seconded to work on the Canadian

launch. It was considered a privilege to be recruited. “The company was pouring in
resources left, right and sideways, so it was palpably exciting in Minneapolis,” says a
former employee. But there was also immense pressure. “From the very beginning, there

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was a clock that was ticking,” says the former employee. “And that clock was absurd.”
The company did everything it could to remove barriers that might slow progress and to
ensure decisions could be made quickly. Timelines were hugely compressed. Building a
new distribution centre from scratch, for example, might take a few years. Target was
going to do it in less than two years—and it planned to construct three of them. One of
the most important decisions concerned technology—the systems that allow the company
to order products from vendors, process goods through warehouses and get them onto
store shelves promptly. In the U.S., Target used custom technology that had been fine-
tuned over the years to meet its exacting needs, and the corporation had developed a
deep well of knowledge around how these systems functioned. Target faced a choice: Was
it better to extend that existing technology to Canada or buy a completely new, off-the-
shelf system? Finding an answer was tricky. 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.
Considered the gold standard in retail, SAP is used by many companies around the
world, from Indigo in Canada to Denmark’s Dansk supermarket chain. It essentially
serves as a retailer’s brain, storing huge amounts of data related to every single product
in stores. That data would be fed by SAP into Target’s other crucial systems: software to
forecast demand for products and replenish stocks, and a separate program for managing
the distribution centres. 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. While SAP might be considered
best in class, it’s an ornery, unforgiving beast. Sobeys introduced a version of SAP in
1996 and abandoned the effort by 2000. (It wasn’t until 2004 that the grocery chain tried
again.) Similarly, Loblaws started moving to SAP in 2007 and projected three to five
years to get it done. The implementation took two years longer than expected because of
unreliable data in the system. Target was again seeking to do the impossible: It was going
to set up and run SAP in roughly two years. The company wasn’t doing it alone, however,
and hired Accenture (which also worked on Loblaws’ integration) as the lead consultant
on the project. 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.

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Target, on the other hand, was starting fresh. There was no data to convert, only new
information to input. By early 2012, with the planned opening still a year away, the nerve
centre for the Canadian launch had moved from Minneapolis to Mississauga, and waves
of American expats settled up north. 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. In the U.S.,
the company prides itself on its development programs for even junior positions like
business analysts, who help co-ordinate the flow of product, and merchandising
assistants, who work with buyers to choose which products to stock and negotiate costs
with vendors. Target typically recruits candidates for these positions straight out of
school and prepares them for a career in retail. That’s how Tony Fisher got his start—he
joined the company as an analyst in 1999, after he was drafted by the Texas Rangers
baseball organization and played for two years in the minor leagues. Young employees
receive months of instruction and are paired with a mentor. Hiring for culture over
experience works, essentially, because Target in the U.S. provides ample training. In
Canada, the company succeeded in hiring people with the right personalities, but young
staff received only a few weeks of training, according to former employees who worked at
Target in both countries. The Canadian team lacked the institutional knowledge and time
to properly mentor the new hires. “Everyone was stretched thin. We didn’t have the
manpower to get everything done in the time frame that was laid out,” says a former
employee. Another was surprised to see how green his colleagues were. “I was one of the
older people there, and I was in my mid-30s,” he says. Target Canada would eventually
learn what happens when inexperienced employees working under a tight timeline are
expected to launch a retailer using technology that nobody—not even at the U.S.
headquarters— really understood.

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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. What appeared to be isolated fires
quickly became a raging inferno threatening to destroy the company’s supply chain. It
didn’t take long for Target to figure out the underlying cause of the breakdown: The data
contained within the company’s supply chain software, which governs the movement of
inventory, was riddled with flaws. At the very start, an untold number of mistakes were
made, and the company spent months trying to recover from them. In order to stock
products, the company had to enter information about each item into SAP. There could be
dozens of fields for a single product. For a single product, such as a blender, there might be
fields for the manufacturer, the model, the UPC, the dimensions, the weight, how many can
fit into a case for shipping and so on. Typically, this information is retrieved from vendors
before Target employees put it into SAP. The system requires correct data to function
properly and ensure products move as anticipated.
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“You name it, it was wrong. It was a disaster.”

A team assigned to investigate the problem discovered an astounding number of errors.

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. Sometimes the wrong
currency was used. Item descriptions were vague. Important information was missing.
There were myriad typos. “You name it, it was wrong,” says a former employee. “It was a
disaster.” It was also something the company should have seen coming. The rush to launch
meant merchandisers were under pressure to enter information for roughly 75,000
different products into SAP according to a rigid implementation schedule. Getting the
details from suppliers largely fell on the young merchandising assistants. In the industry,
information from vendors is notoriously unreliable, but merchandising assistants were
often not experienced enough to challenge vendors on the accuracy of the product
information they provided. (The staff were also working against the countdown to
opening.) “There was never any talk about accuracy,” says a former employee. “You had
these people we hired, straight out of school, pressured to do this insane amount of data
entry, and nobody told them it had to be right.” Worse, the company hadn’t built a safety
net into SAP at this point; the system couldn’t notify users about data entry errors. The
investigative team estimated information in the system was accurate about 30% of the
time. In the U.S., it’s between 98% and 99%. (Accenture, which Target hired as a
consultant on SAP, said in a statement: “Accenture completed a successful SAP
implementation for Target in Canada. The project was reviewed independently and such
review concluded that there is no Accenture connection with the issues you refer to.”)

The investigating team went to Fisher and John Morioka, the senior vice-president of
merchandising, with a drastic proposal: Shut down the entire merchandising division so
everyone could comb through and verify every single piece of data in the system—
manually. The team stressed there was simply no other way to get it done. Hiring an
external consultant would take too long, and it was impossible to expect the employees to
do such a painstaking, arduous task and their regular jobs at the same time. Fisher
immediately gave the green light. Thus, “data week” was held in the fall of 2012.
Merchandisers essentially had to confirm every data point for every product with their
vendors. A buyer might have 1,500 products and 50 to 80 fields to check for each one. The
more experienced employees had the foresight to keep records of verified information
(dubbed “sources of truth”), which made the task a little easier. Others weren’t so lucky.
Complicating matters was the dummy information entered into the system when SAP was
set up. That dummy data was still there, confusing the system, and it had to be expunged.

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“We actually sat there and went through every line of data manually,” says a former
employee. “It was terrible.” Target anticipated how awful it would be and designed the
week to help keep employees sane. To kick it off and rally spirits, a few employees
performed a hip-hop song-and-dance routine on the first day. Ice cream and pizza
flooded in to keep employees fuelled up, some of whom stayed well past midnight that
week, squinting at screens through bleary eyes. There was an entirely different process to
ensure the correct data actually made it into SAP. The employees in Mississauga couldn’t
do so directly. Instead, the information was sent to a Target office in India, where staff
would load it into SAP. Extra contractors had to be hired in India, too. “Sometimes even
when we had the data correct, it got mixed up by the contractors in Target India,” says a
former employee. (Another former employee disputes this: “Sometimes the quality of
their work wasn’t so great, but for the most part they did a good job.”) In any event,
uploading took longer than expected, and data week stretched into two. Periodic data
blitzes in individual departments became common into the following year. But data week
was successful on a number of fronts. It weeded out the worst of the errors and forced
Target Canada to realize the importance of accurate data. It was also a bonding
experience—as terrible as it was. “The company came together that week,” says a former
employee. “We were all in the trenches doing this unglamorous work.”

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On March 4, 2013, Tony Fisher led a gaggle of reporters through a new Target location in
Guelph, Ont. The store officially opened the next day, along with two others in the province.
The company had been teasing consumers for a year at this point, starting with a pop-up
shop in Toronto featuring designer Jason Wu. There had also been a high-profile ad during
the Academy Awards to hype the Canadian launch, and actors Sarah Jessica Parker and Blake
Lively were lined up to appear at the grand opening.

Workers were still stocking shelves at the time, and signs throughout the store read, “We’re
open (mostly).” The three Ontario stores were part of Target’s soft launch, and the company
explained in a press release that the goal was to use them to iron out kinks and “determine
operational readiness” before opening 21 more locations as part of its official launch that
month. At the Guelph store, Fisher, wearing a red checkered shirt and a red tie, pointed out
the bright lighting and wide aisles, and promised a quick, convenient checkout experience.
“Not only have we brought that same Target brand experience,” he said, referring to the U.S.,
“but we’ve actually enhanced it and made it better.” Fisher sported a head of thick dark hair
and could flash a camera-ready smile when he needed to. Some of his former employees
dismiss him as just a media-friendly face, but others describe him as whip-smart, detail
oriented and incredibly dedicated to Target. More than a few people say Fisher “bled Target
red.” When he wasn’t talking to reporters about the pending launch, he could have a stern,
imposing demeanour (a defence mechanism to compensate for his young age, perhaps), so
much so that employees would warn prospective hires about to interview with him not to be
put off. It wasn’t until Fisher got to know people that he warmed up. His tour of the first store
was breathlessly covered by media, and consumer anticipation was running high. In Guelph,
customers lined up before the store opened at 8 a.m., and when they were finally let in, floor
staff cheered and offered them high-fives. News crews were ready to snag customers as they
left and cajole them into showing off their purchases. (The first items bought at Target
Canada? A Tarzan DVD and a Michael Bolton CD.) The foot traffic in the early days was more
than expected, which was encouraging, but it didn’t take long for consumers to start
complaining on social media about empty shelves. “Target in Guelph, please stock up and fill
the shelves,” wrote one aggrieved shopper on Facebook. “How can I or anyone purchase if
there is nothing left for me to buy?” Target told the media that it was overwhelmed by
demand and made assurances that it was improving the accuracy of product deliveries. The
reality was that Target was still struggling with data quality problems that were hampering
the supply chain, and it didn’t have time to address the root causes before opening another
wave of stores. Problems multiplied, and the public mood continued to turn against Target.
Consumers soured on the brand when confronted with empty shelves—the exact scenario
some senior employees warned of earlier in the year.

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“We have to assume sales will be good. It’s very backwards.”

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Ironically, even as consumers encountered barely stocked stores, Target’s distribution

centres were bursting with products. Target Canada had ordered way more stock than it
could actually sell. 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. When the buying team was preparing for store openings, it instead relied on
wildly optimistic projections developed at U.S. headquarters. According to someone with
knowledge of the forecasting process in Minneapolis, the company treated Canadian
locations the same way they did operational stores in the U.S. and not as newcomers that
would have to draw competitors away from rival retailers. Even if the stores were in out-
of-the-way spots—and some of the locations in the Zellers portfolio certainly were—the
company assumed the strength of the Target brand would lure customers. There was
another element at play, too. “Once you signed up to do 124 Zellers locations, it felt like
there was a point where it’s like we have to assume sales will be good,” says the former
employee. “It’s very backwards.” In Canada, some buyers also relied on vendors for
guidance, but vendors fell under the Target spell like everyone else. “They would say,
‘Because it’s Target, they’ll sell double what Zellers was selling.’ And that would be what
we put in that initial forecast,” says a former buyer. In consequence, Target ordered too
much product that first year. It all hit the distribution centres at the same time, creating a
severe bottleneck. 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. Sometimes, the issues concerned dimensions and quantities. An employee at
headquarters might have ordered 1,000 toothbrushes and mistakenly entered into SAP
that the shipment would arrive in a case pack containing 10 boxes of 100 toothbrushes
each. But the shipment might actually be configured differently—four larger boxes of 250
toothbrushes, for example. As a result, that shipment wouldn’t exist within the
distribution centre’s software and couldn’t be processed. It would get set aside in what
was designated as the “problem area.” These sorts of hang-ups happen at any warehouse,
but at Target Canada, they happened with alarming frequency. Warehouse workers got so
desperate to move shipments they would sometimes slice open a crate that was supposed
to contain, say, a dozen boxes of paper towels but only had 10, stuff in two more boxes,
tape it shut and send it to a store that way.

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By fall of 2013, Target’s three distribution centres—approximately four million square feet
in all—were overflowing with goods. Tractor-trailers sat idling in the yards, waiting to be
unloaded. The situation got so bad that Target scrambled to rent a handful of storage
facilities to accommodate all of the inventory flooding in. The process of determining which
goods to send to these rented facilities was haphazard, making it difficult to track things
down later. “It was like a massive black hole,” says a former employee. Another recalls
feeling shocked when visiting the rental warehouse in Vancouver. “It was the most rickety,
Podunk thing you can imagine,” says the former employee, likening it to the treacherous
labyrinthine underworld in Indiana Jones and the Temple of Doom. American expats,
accustomed to the efficiency of the U.S. operations, were flabbergasted. Waves of senior
staff were flown in from Minneapolis, but because they were unfamiliar with the technology
Target Canada used, there wasn’t much they could do. The issues at the distribution centres
caused havoc downstream. Stores might end up with an abundance of some products and a
dearth of others. The auto-replenishment system, which keeps track of what a store has in
stock, wasn’t functioning properly, either. Like many other parts of retail, replenishment is
an exacting science that can go haywire without correct data. At Target Canada, the
technology relied on having the exact dimensions of every product and every shelf in order
to calculate whether employees need to pull more products to fill an empty rack. Much of
that data was still incorrect, and therefore the system couldn’t be relied upon to make
accurate calculations. The problem became immediately apparent when Target opened its
first three test stores. Fisher made the call to shut off the system and replenish manually.
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That meant store employees had to literally walk the floor and check each shelf—a
laborious, error-laden process. (Auto-replenishment wasn’t switched back on until later
that year.) The Mississauga head office, meanwhile, didn’t have a clear picture of how bad
the situation was inside stores. The merchandising department’s software often indicated
items were in stock, but then the team would field confused and angry phone calls from
employees responsible for store operations, demanding to know why they didn’t have
products. “We almost didn’t see what the customer was seeing,” says a former employee.
“We’d look on paper and think we’re OK. Then we’d go to the store, and it’s like, ‘Oh my
god.’” To add even more headaches, 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. Sometimes a
transaction would appear to complete, and the customer would leave the store—but the
payment never actually went through. The POS package was purchased from an Israeli
company called Retalix, which worked closely with Target Canada to address the issues.
Progress was maddeningly slow. In 2014, a Retalix team flew to Toronto to see first-hand
what Target was dealing with. After touring a store, one of the Retalix executives remarked,
“I don’t understand how you’re using this,” apparently baffled the retailer managed to keep
going with so many bugs. But Target didn’t have time to find a new vendor and deploy
another technology. “We were bound to this one bad decision,” says a former employee.
(Retalix was purchased in 2012 by NCR Corp., the American global payment transaction
firm.) “When entering a new country, it is normal for retail software systems to require
updates to tailor the solution to market needs and processes,” NCR said in a statement in
response to questions about Target’s experience. “NCR was making progress to customize
the solution for the market and Target’s new operations until their decision to exit the
country.” Unlike SAP, Retalix is not an industry standard, and why Target chose it isn’t
entirely clear. Former employees suggest that Retalix sold itself on its omnichannel
capabilities, meaning it would be able to process payments on mobile devices. Time may
have been another factor. “In the U.S., this never would have made it off the launching
pad,” says a former employee. “There would have been a robust process for testing.”
Meanwhile, after a few rounds of store openings, the status update meetings Fisher held at
headquarters had turned darkly comic. After the regular rundown of crippling operational
problems, the president still ended each gathering with a pep talk of sorts, reiterating how
proud he was of the team and all they had accomplished. Despite his stubborn optimism,
those meetings had grown more tense too. Everyone knew the launch was a disaster and the
company had to stop opening stores so it could fix its operational problems, but no one
actually said so. “Nobody wanted to be the one person who stopped the Canadian venture,”
says a former employee. “It wound up just being a constant elephant in the room.” There
was also a sense of powerlessness. The Canadian expansion was ultimately driven by
Minneapolis, and because of the real estate deal hatched by CEO Gregg Steinhafel, the

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company was committed to opening these stores. Speaking up wouldn’t have changed
much. “That’s why, in the end, nobody fell on a sword. Because of the leases, it had to move
forward.”

The entire organization started to crack under the pressure. John Morioka, Target’s head
of merchandising, became emotional during meetings on more than one occasion. “I don’t
remember being brought to tears,” he told Canadian Business but declined to elaborate.
Tensions grew between Morioka and Bryan Berg, the senior vice-president of stores, and
both leaders’ direct reports attempted to sort out issues among themselves rather than
involving their respective bosses. (Morioka says he “maintained respectful relations with
my peers.” Berg declined to comment.) Stress caused another former employee to crack a
tooth from grinding his teeth during sleep. It took a toll on personal lives as well. “I was
just so exhausted all the time,” says yet another former employee. “When I came home, I
was no one. I was a shell.” Tony Fisher felt it too. He was open about telling employees that
he’d never managed through such a challenging situation before. Former employees say
his background—primarily in merchandising—was ill-suited to helping him deal with the
severe operational and technological problems Target Canada faced. Those close to Fisher
say he took the company’s troubles personally. In the early days, he was a constant sight on
the floor of Target Canada’s open-concept office, chatting with employees at all levels. But
he and some of his leadership team became less visible as problems mounted. “For leaders
who have experience with failure, that would be the last thing you do,” says a former
employee. “You would be front and centre, give confidence and reinforce the direction.
That didn’t happen.” Others contend Fisher’s schedule didn’t allow him to be as visible. As
the situation worsened, he was frequently in meetings, participating in conference calls,
visiting stores or flying to Minneapolis. (Fisher declined to comment.) In February 2014,
Target headquarters released its annual results, revealing a US$941-million loss in
Canada. The company attributed the shortfall to growing pains, expansion costs and—
because of all that excess inventory sitting in warehouses—significant markdowns. “As we
enter 2014 with a much cleaner inventory position, the team’s number one operation focus
is on in-stocks—ensuring we have the right quantity of each item in the right place at the
right time,” Steinhafel said on the earnings call. It was his last as Target CEO. A month
prior, Target had disclosed a massive security breach in which hackers stole the personal
information of 70 million customers in the U.S. Combined with the bleeding operations in
Target Canada, Steinhafel’s position was untenable, and he stepped down in May. (He
walked away with US$61 million in compensation.) Fisher—hand-picked by Steinhafel—
left the company two weeks later. By the end, Fisher was practically a ghost. “He gave
every last ounce of himself. He was just done. He had nothing left,” says a former
employee. His departure wasn’t surprising, but it was deeply felt. “I loved Tony. He’s
probably one of the smartest people I’ve met,” says someone who worked with him closely.

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“He absolutely took the fall for Target Canada.” The reality is the odds were stacked against
him from the start, given the extremely tight timeline and the thin margin for error.
“Everyone was trying to execute Gregg Steinhafel’s deal,” says a former employee, “and
once one thing went wrong, it was an impossible achievement.” But someone else now had
to try.

It was Mark Schindele who took over as head of Target Canada. He was a 15-year
company veteran and previously served as a senior vice-president of merchandising
operations in Minneapolis. At one point, Target Canada had printed a weekly flyer in
which nearly every single item featured on the front cover was out of stock, a situation
that would have been unheard of in Minneapolis. When Schindele learned of it,
according to a former employee, he remarked, “I can’t believe it’s as bad as it actually is.

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