On Thursday morning, the 17,000 Target employees working for the company in Canada found out they will be losing their jobs.
Target’s U.S. parent announced it planned to close all 133 stores, including the one at Willowbrook Shopping Centre in Langley. The closure comes just two years after Target opened to great fanfare in Canada, after taking over most Zellers stores and their leases.
In years to come, Target’s advance and retreat in Canada will likely be used as a classic textbook case study in business schools. The company had a good reputation in Canada before it opened a single store here, given that many Canadians live near the border and regularly shopped at U.S. Target stores.
It decided to take over an existing chain that had a loyal core of shoppers, close down those stores and lay off all employees. It then completely renovated them, and opened a large number of stores all across the country, all at once. This is something that no other U.S. retailer who has made the trek north has done.
Walmart took over Woolco, but gradually rebranded their stores. There were far fewer Woolco stores than Zellers stores. Walmart also gradually opened new stores and, in more recent years, has renovated its stores to add large grocery sections.
Building supply stores Home Depot and Lowe’s both entered the Canadian market more gradually, even though they were (and remain) large U.S. chains. Costco also came into Canada more gradually as well.
By all accounts, all these companies have done well with their Canadian operations.
By coming in more slowly, they all learned the challenges of doing business in Canada, including the higher costs of distributing to a smaller number of stores that are more widely geographically separated than in the U.S. They also learned that Canadian shopping habits differ from U.S. ones, and have catered their offerings to Canadian habits.
Target got off to a bad start when its stores opened here. Inventory at many stores was spotty, and there were persistent reports of empty shelves. Prices were considerably higher than at U.S. stores, which may have been understandable, but was a cause of resentment by many formerly loyal Target customers.
The Target stores will likely close over the next few months, as the Canadian subsidiary is wound down. It isn’t good news for the employees. At the same time, it shows that, in business, it is vital to have products that meet consumers’ needs, and to be able to execute a proven growth strategy.
Companies who forget those fundamental lesson simply cannot stay in business.
