Why Target Failed In Canada

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.

Chapters:
Ch. 1 - 1:13 Expanding internationally
Ch. 2 - 2:44 Why it failed
Ch. 3 - 7:56 Target international on pause

About CNBC: From 'Wall Street' to 'Main Street' to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more.

Connect with CNBC News Online

#CNBC

Why Target Failed In Canada

[Sotto_]

Canadian here. I'll tell you why Target failed.
Target was given a big welcome in Canada with a lot of fanfare. I've shopped Target in America and I was looking forward to it.
They took over Canada's Zeller's stores, so they had pre-existing markets with customers ready and eager to spend.
Why they failed was because the stores were stocked with garbage.
We walked in, looked around, and walked out. What items that were available you could buy at the dollar discount stores for one tenth of the price. Shelves were bare, and after going back for several weeks, waiting for things to improve, we gave up.
We got the feeling Target was shipping all of their junk north, thinking Canadians were stupid enough to buy anything.
Wrong.
Canadians are savvy consumers and expect value for their money. With Target replacing Zellers, Canadians expected mid/high quality goods for fair prices. That was not what Target offered.
Once word came Target was closing, except for the thousands that lost their jobs, Canadians were glad to show them the door.
No worries for Target though, as they probably got a great tax write off for the failure.

[joannadawnadventures]

As a Canadian, my opinion the reason Taget failed in Canada was because Canadian walked into those stores expecting to see products and Brands we found when we were in the US stores but instead we walked in the stores seeing the Exact same thing we already had in our store, specifically Walmart.

[SinisterSlay]

As usual this misses one important factor.
After you went to target once, you noticed the item prices seemed high. So you would google it, find the Walmart listing, which was usually the store next door, and find the exact same item cheaper.
After that, Target became an expensive place to buy cheap stuff, when literally every other store sold the same thing but at a lower price.
This got worse when people learned target's price for the same item in the states was cheaper even after including exchange rates. I believe W5 even did a report on how retailers (with an accidental focus on target) were purposely marking up Canadian prices with the idea that the market would take it anyways. And Walmart took over everything.

Like many companies, target came in thinking Canadians are just a bunch of Americans with more money. By the time the truth was learned, it was too late.

[Alphax]

As a Canadian who went to a target in the us and in Canada. We got none of the deals and they refused to stock what we wanted. They made no effort to compete with anyone else. So we just kept going to Walmart.

Target rode in with the middle finger or demanding that we just give them money when the same thing was available down the street for a lower price.

Also the American staff training the Canadians often came across as being very abrasive.

[arjinlally]

As a Canadian, one of the other biggest flaws that I would say was the selection of items. Whenever we cross the border into the United States and go to Target, it's because they have alot of stuff that none of the stores in Canada sell not to mention the much lower prices. The items prices and sizes of products are actually quite different when you compare Canadian products to American ones and Target didnt seem to bring any of the products or low prices to Canada and what they essentially had was a low quality copy cat of a Walmart.

[Braubeaton]

A big part of the downfall in Canada was the Zellers takeover. In my city Zellers was very popular meaning Target had large shoes to fill. I can recall being very underwhelmed at my first visit and some lady laughing loudly for all to hear "I want my Zellers back!" From our local perspective, Target bought our beloved Zellers, gutted it and then left town. After Sears Canada collapsed it has left us in a huge hole with only ONE true dept store to cross shop at: Walmart. Yeah, still feelin' it.

[elstepeeno]

As a former worker during those times working at a supply chain that handles product for Target in Canada, I can confirm that it was indeed a mess. What was even more embarrassing was the fact that the labels we were putting on the outer box (that was used to locate items in the warehouse) were displayed in store. Target should’ve focused on a handful of stores and test the market instead of rushing everything nationwide..

[Falconlibrary]

When I was living in Palm Springs, we had a lot of Canadian snowbirds come down to escape the winter. They were delighted with the local Target and said that the Canadian Target stores were horrible--one lady asked "Why can't we have stores like this?" Whoever was in charge of the Canadian expansion really screwed up.

[dknight]

They didn't hire Canadians to run the operation, and American executives didn't understand Canadian idiosyncrasies. It was sheer ignorance and arrogance on the part of Target. The market was theirs for the taking. Like many others, I was excitedly anticipating the opening of their stores, and could not believe the bare shelves and unexpectedly high prices. I never returned.

[KamiInValhalla]

Sounds like the issue was they were so focused on opening 124 stores instead of maybe 20-30 as a stepping stone

[w.a.l]

Nova Scotian here. One of the reasons Target failed in Canada: our geography. Canada is a massive country that by any standard is sparsely populated. We are only 38, 000, 000 in the second largest country in the world. California has more people than all of Canada. Instead of focusing on larger urban areas like Montreal, Toronto, Calgary, Edmonton, and Vancouver, they opened stores literally everywhere. Our consumer preferences in Canada are basically a carbon copy of the United States. Let's be honest, we are very similar people. In Nova Scotia we have just over a million people. They opened 3 stores here immediately, 2 of which were in Halifax with a population of only 500, 000. One of their stores was in the Sydney area with a population of less than 100, 000 with 3 existing Wal-Mart stores. I went to Target a lot locally. By comparison, Halifax has 5 Wal-Mart stores, one for about every 100, 000 people. The Target stores were either half empty, or bare. They had zero distribution network as they were trying to fill way too many stores. They should have focused on the big markets first, and let it grow organically. People were turned off with the quality and availability of products. There was definitely an opportunity for a mid-level department store in Canada, and Target fit the bill. They simply tried to expand too quickly and didn't realize just how damn big Canada is.

[elizabethmillard]

Note: I loved Zellers. Not all shiny like the Target store but a comfy place to shop with reasonable quality products. I miss those stores.

[ChristineLotus]

I clearly remember the first thought I had when I walked around Target “Do they think us Canadians are idiots?” The products were really cheap and the prices were really high. I went once and never went back

[rbrtr]

Target advertised a Remembrance Day sale in Canada (Veteran's day in USA). This went over like a lead balloon. Remembrance day in Canada is a somber day, the backlash against Target was severe, and they apologised for the sale.

[iloveyouamberappel]

As a Canadian the issues I noticed:
-Canadians expected a rival to Walmart and hoped this translated to lower prices. This didn't happen. Target's prices were higher than Walmart.
-Target did not have brand loyalty in Canada. Without at least starting with lower prices, many Canadians went once and not again.
-Target had problems keeping shelves full. The consumers that did shop at Target soon found empty shelves.
-Products Target did carry were not different from anyone else. Again without establishing brand loyalty. There was no reason to shop at Target when Walmart was cheaper

[redheads]

Target failed in Canada because they had none of the deals they had in the US. They were also over ambitious by taking over Zeller's leases and opening many stores at once, which led to logistical problems.

[zedxyle]

In the US, Target is seen as a slightly more upscale version of Walmart. In Canada, where frankly I think Walmarts are of a higher quality than in the US, Target was simply seen as just an unnecessary duplication of Walmart.

[cgasucks]

Target didn't do their homework a dived in head first without seeing how deep the water is. This resulted in logistical nightmares causing shelves to be chronically empty (and this happened before the pandemic which is pretty sad). Walmart on the other hand took their time and started slow by acquiring Kmart Canada & Woolco for starters and grew steadily over the years. Target thought they could do the same thing in months that Walmart took decades to accomplish.

[HOLES]

I used to visit my cousins in Illinois every summer and loved going to target. Years later they opened in Ontario and I was excited. I eventually got around to checking the stores out just to be majorly disappointed. It was more or less a glorified dollar store.

The market is here if companies (like Walmart) actually care to invest in it. Sending a bunch of junk that nobody in the US wants isn't the way to go about it.

[pucfpdm]

One of the biggest reasons Target failed in BC was because people were expecting the same selection of goods found in US Target stores to be in the Target stores in the Lower Mainland.