Target’s distinctive red and white bulls-eye logo is making its way out of Canada– and few were really surprised. The U.S. department store chain announced last week that it will close all 133 of its Canadian stores.
The retailer has struggled since it first opened its doors to Canadians in March 2013. Official estimates suggest the company has lost about $2 billion since then.
Why did the multi-billion dollar U.S. chain fail?
Steve Tissenbaum, a retail management professor at Ryerson, says there are a variety of reasons.
Here’s a rundown of the reasons why Target did not hit its mark in Canada.
- Location, Location, Location:
“The locations were not that good,” Tissenbaum says. Despite opening 133 stores across the country, it’s likely that a good portion of Canadians have still not been to a Target because of where they are situated. For example, most Targets in Ontario are either in the suburbs or located outside of business districts. This could have prevented the company from gaining a wider range of clientele over the past two years.
- Unfamiliar Vendors:
Is it possible that Canadians just didn’t have enough brand knowledge of Target in the first place? Tissenbaum thinks so. He mentions Target’s U.S. designer list as just one example of popular products that may have not carried over well into their Canadian locations.
- The Products:
Inventory was a problem. Target shelves across the country were often reported to be empty due to the corporation not having a stable Canadian distribution network. Because of this, Tissenbaum compares Target to Wal-Mart and says the latter “has the product” and also notes that the U.S. version of Target by contrast has a “famous array” of products.
- Did not live up to its name:
“I felt like I was shopping at Zellers,” Tissenbaum says. He calls Target’s early entry into Canada as a “halo effect,” which was brought on by initial mass promotional efforts and has since passed. In other words, they had the promotions but did not deliver the experience.
- Too fast, too soon:
The biggest reason? Target Canada was simply too premature in its expansion. Prior to its opening, Target paid $1.8 billion dollars to buy out the Canadian retail chain Zellers. Tissenbaum cites Nordstrom’s slow expansion into Canada as a good example of company growth. The American fashion retailer opened its first location in Calgary last year and plans to expand into Ontario this year, starting with Ottawa in March.
According to Target Canada’s Twitter, the corporation will officially begin to close down over the next 16-20 weeks and its liquidation process will start within 2-3 weeks.