On March 23, I reported on the disappointing launch of Target into the Canadian market. Despite all the splashy billboards and advertising gimmicks, Target Canada failed to meet consumer expectations. But why? Many Canadian shoppers traveled long distances into the U.S. to buy at Target. Most were well satisfied with the experience so why couldn't Target simply transfer its successful American model to Canada?
At the time of launch, the most notable shortfall was a pathetic website that offered few price comparisons and a paucity of product. Many shoppers check on-line before entering a retail store. Without a credible website, they bypassed Target in favour of Wal-Mart and other outlets. Apart from the website, the next major problem was empty shelves. John Mulligan, Target's Chief Financial Officer said "I've been in the stores and I've seen the gaping holes on our shelves. It's unacceptable for us to look like that. The No. 1 item is improving our supply chain and in-stocks (products)". But how could this happen, particularly since Target ran a highly successful American chain? When 124 new stores were launched, the company had no information about Canadian customer profiles and buying habits. Without this data, their distribution network bogged down into hit and miss forecasting on the amount of goods to order and the types of products consumers wanted. This, coupled with faulty IT systems and a substandard website created a negative first impression on consumers who expected a mirror image of the great deals and services they got when they crossed the border to shop in American Targets. Retail analyst, Doug Stephens noted "What is more disappointing, from my point of view, is the length of time it has taken to address these issues - I would think this would have been seen as nothing short of an emergency, especially with Target's speedy and seamless supply chain in the U.S. as a role-model".
Faced with a disaster, Target replaced the CEO with Mark Schindele, a former vice-president of Target's U.S. merchandising operations. The company also hired a new "head merchant" and a new senior vice president of stores and distribution. Now they're looking for a senior Canadian business figure to help the new executive team gain a better understanding of the Canadian retail market.
In this kind of chaotic environment, it's essential for a new CEO to take command, restore confidence among employees and offer new hope to disappointed shoppers. Mark Schindele seems to fill this role. He came, he saw and he took control. He immediately hired 2 external firms to conduct an independent operational and strategic assessment. He then called a media conference and said: "After 30 days, we want to have an aggressive road map towards improvement.... We have let our guests (customers) down, we need to fix our operations. We are going to get to the root cause of the issues and fix them. That is our goal, within 30 days, to have a plan that will fix our issues one time, and be done with it".
Can Target Canada pull off what amounts to a retail miracle? Stay tuned for Chapter 2 of this exciting cliffhanger.
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