What Went Wrong For Target Corporation (NYSE:TGT) In Canada?


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Brian Cornell, Target Corporation (NYSE:TGT) CEO, recently announced the end of the retailer’s Canadian operations, citing review of all possible options suggests that it would be difficult to lead Target Canada to profitability at least until 2021. Cornell, who took over as Chief Executive in August 2014, focused his attention to the company’s Canadian operations but could not drive the revival.

Target surprised the retail industry by announcing to shut down all 133 stores in Canada following less than two years of its first ever oversees foray. The closure is estimated to impact at least 17,600 jobs in the country and cost approximately $5.4 billion in pre-tax losses to the U.S. retailer.

Experts believe that Target Corporation (NYSE:TGT) was too fast in setting up its Canadian operations with launch of 124 stores in just one year. Such a strategy gave little room to the retailer to benefit from trial and error mechanism, which is usually a beneficial strategy while entering a new market. The retailer also failed to set up effective merchandising and supply chain strategies, which ultimately resulted into customer dissatisfaction.

Experts blame Target Corporation (NYSE:TGT) for being overly selective and omitting exclusive brands from its Canadian inventory as well as failure in offering adequate online presence. The company also failed to leverage consumer familiarity because of issues with pricing perceptions, attributed to issues with in-stocks and out of stocks inventory and competitive pricing.

Molly Snyder, spokeswoman for Target, said the management considered every possible scenario to save the Canadian operations, including closing down a flat number of stores and distribution centers, or even operating with a smaller footprint. However, none of them found to bring the operations to profitability at least for next six years. Target will now focus on expansion of its smaller-format City Target stores and strategies to keep the business competitive and thriving.

Lisa Ray

Lisa Ray primarily covers Retail and Healthcare. Lisa Ray has completed her MBA (Finance) and an avid market tracker. She is a stock market analyst who closely tracks US markets along with other global markets like India. She has been expressing her views for years about markets and also advises various clients.

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