Why America’s Retailers Like Target Fail Abroad | CNBC Marathon

From Target and McDonald’s to Harley-Davidson, CNBC Marathon explores why some U.S. retailers struggle to make it abroad.

Target’s first and only foray into international markets happened in 2013 in Canada. The retailer opened a total of 133 stores in just over a year. But the expansion didn’t go as planned. By April 2015, Target withdrew from the North American neighbor and closed all locations. Poor real estate decisions, weak leadership, and major SAP systems errors contributed to the company failing in Canada. Target lost $4.1 billion in after-tax losses in just one year as a result of the fallout. The company has no plans to expand internationally anytime soon.

McDonald’s is synonymous with fast-food in many parts of the world, but there is one country where it’s failed to capture national attention. Iceland celebrated the fast-food chain when it entered in 1993, but a global economic collapse during the next 15 years forced McDonald’s to exit the Nordic region.

And Harley-Davidson may be the biggest name in American motorcycles, but the U.S. market is aging and shrinking. India and southeast Asia, with massive and growing markets, offered Harley-Davidson hope. But the legendary maker of big iron ‘hogs’ faces fierce competition in India. In order to succeed, Harley will need to make smaller and cheaper bikes that its most loyal fans might not recognize.

Chapters:
00:00 – Introduction
00:33 — Why Target Failed In Canada (Published September 2022)
12:47 — Why McDonald’s Failed in Iceland (Published February 2019)
20:24 — Why Harley Davidson is struggling in India (Published May 2019)

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Why America’s Retailers Like Target Fail Abroad | CNBC Marathon

[markdc]

The biggest single mistake retailers make is in believing consumers outside the US want to be just like us. They don't.

[rtsharlotte]

Walmart in Germany was a colossal disaster and its insane mentality that the German experience of shopping is the same as the US's. There was stupid levels of arrogance with employment and trading laws.

[haisheauspforte]

Here in Germany, Walmart was such a failure that they had to sell all their stores to a domestic competitor

[OleJanssen]

I distinctly remember when Walmart came to Germany.

They had these super, I mean super large stores, but in the end, they had about the same priducts other retailers like Aldi had, just in larger quantities. By that, I don't mean that there was a larger selection, but that they literally filled entire aisles with just one product, by one brand, which led to a super deserted atmosphere, in addition to long walks and no overview.

In combination with significantly higher prices, I am not surprised at all that it didn't work out.

[matthewbaynham]

I think Harley-Davidson's problem is the style of bikes they make.

Harley-Davidson's are designed for going in a straight line, just cruising from one US city to the next city without ever going around a corner. The geometry of their bikes reflects this, if you took a Harley-Davidson onto a motor racing circuit which has corners then it would fail.

In India when you drive on an Indian road anything can happen, perhaps there is a massive hole in the road that you need to suddenly avoid, or perhaps someone almost kills you by driving at you. But you will need a bike that is responsive and can suddenly turn very quickly, ready for any surprises either that or you died in a road traffic accident.

If you look at the geometry of all the bikes that were selling well in India they were all very upright and would be far more responsive if you need to suddenly turn.

I think Harley-Davidson should try making a bike that is designed for corners, maybe not a motor-racing circuit but at least something you can drive on a Alpine road with all the hairpin bends that the Alps can possibly throw at you, that might do better in the Indian market.

[HoldMySoda]

Walmart didn’t start from the scratch, in Germany. They bought the Wertkauf stores which existed very successfully over decades. Walmart ignored the local market structure and its culture completely. I happened to witness this kind of behavior by American business people several times in my professional life. Aldi or Lidl for example approached the local markets all over the world in a much smarter way.

[Muninnnr]

I wouldn't say that Starbucks has "failed" in Sweden, but they sure haven't done as well as expected or desired. A large part of the reason for this has to do with Swedish coffee culture and how it's very different from in the US. We have a LOT of domestic alternatives that cater to our tastes, which are a lot more into dark, rich coffee. I once read an article that said something along the lines of "Starbucks as a coffee business has failed in Sweden because they don't sell coffee, they sell liquid desserts".

[fluffyfour]

I live in the UK and used to work for a large American company. They simply made assumptions about everyone being the same as the US! I remember working on a major system due to be rolled out worldwide. They swanned in one morning and announced, as if it was perfectly OK, that there was a problem with currency handling and everyone would need to work in US dollars. This was pre-Euro and involved 60-70 different countries/currencies. We sat there open-mouthed with shock while they wondered what the problem was!

[ScareFestTTV]

Probably the biggest blunder in Canadian retail history was that of Target. They could have succeeded here too if they wouldn't have rushed things meanwhile their inventory system didn't even work in the country.

[seriousbutfunny]

The best part about visiting another country is not finding the same $hit you can get in the U.S. It's about experiencing local culture and food etc...

[RADIOactive]

If you rush into a community guns and blazing, don’t understand the needs of the community, and not give that community a reason to buy items from you, you’re going to fail big time.

[grouchomarcus]

Target also failed to do their market research and didn’t realize their primary competition wasn’t Walmart but Canadian tire. I worked at Target at the time and their logistics was complicated by the fact that their merchandise had a different coding system than the American stores.

[Tuppoo]

I once went to a Skechers shoe store here in Finland. It was a very strange experience. Greeters, or whatever they're called, aren't a thing in Finnish stores. Also, for some reason, the salesperson insisted on tying my shoelaces for me. I can do that myself. Their selection of shoes was also a poor fit to the Finnish climate. Suffice to say I didn't buy anything from them.

[JewTube]

For those wondering, Target Australia isn't Target. They just got permission to use similar branding a long time ago but besides that the two retailers have never been part of the same company.

[jameslewis]

American retailers tend to think that they can be successful stepping into a foreign market while keeping up their obnoxious corporate culture, tacky and intrusive sales approach along with the same exploitative staffing practices as they get away with at home. In the UK as an example, people like to be given their own space. Being constantly approached by sales staff is both intrusive and irritating to us. The whole idea of having someone who's main job is to meet and greet people at the front of the store is something we find tacky and uncomfortable. Finally the 'have a nice day' and 'southern hospitality' approach comes over as insincere to us as well, American firms just seem to lack the ability to let people approach their roles naturally. Due to a combination of these factors consumers from the UK would generally try one of these stores once and never come back again while telling their friends and family to stay away from them.

[ErGeFo]

Canadian Hudson's Bay department stores failed epically when they wanted to open 20 stores here in The Netherlands. They didn't have a clue what they were doing.

[jermainemyrn]

Alot of countries don't let American companies come to theirs because they see how ruthless companies are towards their own employees. It's about ethics and morals. Americans don't prioritize that even a little bit

[stephennewton]

Any company will have to comply with local employment laws. Walmart didn’t do their homework on this and failed in Germany and the U.K. (and possibly others). I’m guessing German employment regulations are similar to that in the U.K., so everything from holidays (vacations), maternity/paternity leave, minimum wage, working week hours caps and of course health care contributions through corporate taxes to name but a few will have had an impact. Additionally finding sources outside the US to supply product to European markets might also have caused unanticipated problems (many US grocery products don’t meet European legal requirements due to chemical additives, growth hormones, processing techniques, sugar content, added water and saline etc).

[petebusch]

Big box stores excel at ONE thing, having the largest store possible while not stocking a single thing I'm looking for. Its really amazing how well they do at this as though it was done by design.

[HuatulcoGuy]

I visited a Target store in Ontario Canada on Christmas Eve aftrenoon to do my last minute shopping for gifts. I was expecting to be in a store full of desperate people filling thier shopping carts with all sorts of items. As it turns out there were only a handful of customers and staff standing around doing nothing.
I knew then that Target Canada was doomed to fail.