Target Misses The Bullseye: "Retail is Detail". Chapter 2

The age-old maxim "Retail is Detail"  rings as true today as it did 100, 200, 500 years ago.  To be successful, a retailer must offer consumers a good first impression.  Target Canada, an offshoot of the American parent Target Corp., completely missed the mark and drove customers to the competition.  So what went wrong?  First, Target Canada failed to offer Canadians what they expected - the American experience.  Most of Canada's population lies within driving distance of the U.S.   border;  many had frequently visited Target stores there.  But when Target opened its doors north of the border, many familiar brand-names were missing.  Secondly, Target Canada could not develop an efficient supply chain - leaving many stores with empty shelves and angry customers.  Thirdly, the company opened 124 stores in 2013, before evaluating consumer response.  With hindsight, said John Mulligan, Chief Financial Officer, "it would have been wiser to open 5 - 10 Canadian stores in 2013, giving us more time to gauge consumer appetite.....We bit off way too much too early".

So where does Target go from here?  One analyst said the company should "cut its losses"  and sell-off its Canadian outlets.  Michael Exstein of Credit Suisse First Boston wrote to his clients:  "Target took a vast risk with Canada, entering the market with a large-scale operation, apparently under the assumption that the retailer could only win...... This decision has proven to be costly, in terms of capital investment ($6 billion)  and continued losses".  But other analysts take a longer-term view.  They point out Wal-Mart took 3 years to reach profitability in Canada.  Wal-Mart also stuck it out in Germany and South Korea for 8 years before giving up and shutting down those operations.  Home Depot tried for 6 years to make inroads in China before admitting defeat.  So now Target Canada is at a crossroads - stay or go.  At the moment, the evidence points to giving it a good shot.  At least the company recognizes the problems.  It knows that if it can just duplicate the American model, it will succeed.  Hopefully, it's not too late to win back customer loyalty.  Just get the "detail"  right this time.