BOARDROOM, NOT SHOWROOM, FAILURES COST TARGET

Without a doubt the most heavily analyzed retail foray into Canada was the ill-starred arrival, and soon thereafter departure, of the Target chain. From the first day the first store opened, the criticism was blistering: same old Zellers layouts, old stock, underwhelming pricing, underwhelming selection, and so on.
Not long ago I even tackled some of Target’s issues in this space, but at that time I believed there was enough brand equity with the Canadian shopper that there was a chance it could still turn things around.
As we all know now, it did nothing of the sort; after turfing a CEO (and no doubt others with much less publicity), Target closed its Canadian operations for good in April.
Target did have an uphill battle from the very beginning. Its first mistake may have been to gamble its cheap-chic reputation on cut-rate retail locations that may have looked good to the bean counters, but simply weren’t up to snuff for Target-smart shoppers.
Furthermore, shelves were often empty, pricing simply didn’t knock consumers’ socks off – and yet, even after a dismal start, Target didn’t seem to fully appreciate the need for a rethink.
I have read that the empty shelves were the result of inflexible planogram-obsessed floor managers, compounded by store systems that could not communicate with warehouse systems. The result was stockrooms jammed to the rafters with product, which the planogram enforcers wouldn’t allow to be used to fill empty shelf space.
That said, it would be a mistake to assume that the empty shelves were the only cause of Target’s demise. They were just a symptom of poor decisions made at the very top. Among these was the oft-repeated mantra that Canadians had to get used to being a one-stop shopping culture. That sentiment was called arrogant by many analysts, and rightly so, though it was probably not meant that way.
To me, what it says is not that Target assumed it could change Canadian shopping habits, but that Target needed them to change to meet its average sale imperatives – or if you wish, average sales per square foot – that formed the foundation of its business plan here.
Somewhere in Target’s archives is a spreadsheet that shows what they needed, and what they could reasonably expect to get from those stores. And that gap was never going to close without a massive shift.
When viewed that way, there is a note of desperation in the assertion that Canadians could be made to change their habit of cherry-picking different discounters for their weekly or monthly shop, simply because there was a shiny new store in town.
Armed with those imperatives, red flags should have gone off even before the first store opened when cross-border rules and conflicting supplier arrangements made it clear that Target could simply not duplicate the experience that had made it a hit with cross-border shoppers.
Instead, somebody decided that the Target name was more important than brands and selection. We’ve seen that before in Canadian retail – Eatons and Simpsons, to name just two – and it has never ended well.
Target’s failures began with a plan that was flawed, because it required customers to radically change their habits to succeed. It compounded them by going full steam ahead even when it became all too apparent that Target would not be able to deliver what customers (who might actually have been willing to change) were looking for.
In the end, Target’s best decision probably came from the same place as all the poor ones had: the boardroom. Looking at a projected profit horizon of 2021, mounting debt, and troubles enough at home (data breaches and other problems), management’s decision to cut its losses and leave Canada may just have been one of the few correct decisions it made in this whole affair.
Andrew Ross, publisher and editor, Jobber News Magazine