Target is giving up on Canada. The retailer announced today that it would close all 133 of its stores north of the border, which have been losing money since it arrived in the country less than two years ago, boldly venturing into its first international expansion.
By all accounts, the adventure has been an unmitigated disaster—a story of a company trying to accomplish too much, too fast, with too little thought. 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,” as Fortune puts it, whose locations were “dumpy, poorly configured for Target’s big-box layout, and were in areas not frequented by the middle class customers Target covets.”
But that wasn’t the real killer. Because it revved up so quickly, the company never had time to develop a working supply chain in Canada, which left its stores short on merchandise and full of empty shelves. After the market researchers Belus Capital Advisors published pictures of the barren aisles, it led to headlines like this from DailyMail.com:
Here’s a taste of what Target’s Canada stores looked like. Notice something missing?
No, they probably didn’t have your size.
You probably get the idea.
It was bad.
Nobody likes shopping in a picked-over retail ruin. But, there wasn’t much individual stores could do to improve their appearances. As a former Target employee explained in an email to Gawker, there was no way for the Canadian stores to tell distribution centers what items they needed each day. If they were out of eggs, or milk, or shirts, they had to hope those things would show up on a truck full of mystery merchandise that arrived each morning. Meanwhile, the company’s rulebook prevented employees from filling the barren shelves with whatever else they had on hand. 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.
Sourced from slate.com