Abandoned - Target Canada

Summary

This video delves into the rise and fall of Target's Canadian venture. In 2011, Target expanded into Canada, acquiring 220 locations from Zellers. Despite a grand opening, the retailer struggled due to pricing issues, inventory management, and stiff competition from Walmart. Target's Canadian operations suffered massive financial losses, eventually leading to bankruptcy in 2015. By 2016, most stores were closed or abandoned. While some blame poor management, others cite the difficult Canadian retail landscape. The video reflects on the failure of a company many had hoped would succeed in Canada, contrasting it with the dominance of Walmart.

Takeaways

• 😀 Target, a major U.S. retail chain, tried to expand into Canada but faced significant challenges, ultimately leading to its bankruptcy in 2015.
• 😀 Target acquired 220 locations from Zellers in 2011 for $1.8 billion, marking its first step toward Canadian expansion.
• 😀 Despite the investment, Target Canada faced a major hurdle: its prices were perceived as higher than its U.S. counterpart, which led to poor customer retention.
• 😀 By 2014, Target Canada had already reported a loss of $940 million for the year, signaling early signs of its impending failure.
• 😀 Target's failure in Canada was partly due to inventory management issues, with empty shelves and poor product availability frustrating customers.
• 😀 The company struggled to adapt to the Canadian market, with many people feeling the stores didn’t live up to the American Target experience.
• 😀 Target's management underestimated the competition, particularly from Walmart, which dominated the Canadian retail market.
• 😀 A major data breach in 2014, compromising 40 million customer credit card details, further damaged Target's reputation in Canada.
• 😀 Target's exit from Canada led to the closure of all 133 stores by May 2015, with 17,000 employees losing their jobs.
• 😀 Despite its failure in Canada, Target was still considered a great store by many, and some believed it was a better alternative to Walmart.
• 😀 The Canadian market has proven challenging for large retailers, with many, like Sears, also struggling or closing in recent years.

Q & A

What was Target's initial plan when entering the Canadian market?

Target's initial plan was to acquire 220 Zellers locations for $1.8 billion and open stores across Canada, starting in 2011. The company aimed to bring its retail operations into Canada, competing with major players like Walmart.

What were some of the challenges Target faced when operating in Canada?

Target faced several challenges, including intense competition from Walmart, higher-than-expected prices compared to its U.S. stores, inventory issues, and a security breach involving customer credit cards. These factors led to Target's inability to meet Canadian consumers' expectations.

How did Walmart influence Target's failure in Canada?

Walmart's dominance in the Canadian market made it difficult for Target to gain a strong foothold. Walmart's lower prices and established presence made it a more attractive option for Canadian consumers, contributing to Target's struggle to compete effectively.

What were the financial losses reported by Target Canada?

Target Canada reported significant financial losses, including a $940 million loss in 2013 and a $211 million loss in the first quarter of 2014. These losses led to the company filing for bankruptcy in January 2015.

What role did inventory management play in Target Canada's downfall?

Inventory management was a major issue for Target Canada. Many stores had poorly stocked shelves, which negatively impacted the shopping experience. This led to dissatisfaction among Canadian shoppers and contributed to Target's decline.

How did Canadians perceive Target compared to Walmart?

While some Canadians preferred Target over Walmart, many were disappointed by the pricing discrepancies between the U.S. and Canadian stores. They found that Target's prices in Canada were often higher than expected, which undermined the store's appeal.

What event caused significant damage to Target Canada's reputation in 2014?

In 2014, Target Canada suffered a major security breach, compromising over 40 million customer credit cards. This breach led to a loss of consumer trust and contributed to the company's struggles in the Canadian market.

How did Target's rapid expansion affect its performance in Canada?

Target's rapid expansion in Canada, including a tight timeline for opening new stores, did not allow the company to adequately address operational and market challenges. The fast pace of expansion contributed to issues like inventory mismanagement and pricing mismatches.

What was the outcome of Target Canada's bankruptcy filing in 2015?

Following the bankruptcy filing in January 2015, Target Canada closed all 133 of its stores within just four months. This resulted in 17,000 employees losing their jobs. Many of the stores, along with former Zellers locations, remain abandoned as of 2016.

What was the impact of Target's closure on Canadian malls, according to Mike Bal Castro?

Despite concerns about the closure, Mike Bal Castro, president of Seaway Mall, noted that many malls saw an increase in sales after Target's departure. Surprisingly, some malls had their best sales years, partly due to cross-border shopping and a weaker Canadian dollar.