I’d heard lots of good things about the Target chain before they came north to Canada (James Lileks, for example, should be getting a regular cheque from the firm for his regular name-check of the local Target store in his writing). When a new Target store opened in Whitby, Elizabeth and I visited shortly after the doors opened. To say it was disappointing is an understatement. We expected to find a new, clean, fully stocked store with different brands and lower prices. What we found was a new, clean store with exactly the same stuff we’d seen before at pretty much the same prices. In other words, there was literally no reason to come back … and we haven’t been back.
Jason Kirby says that our experience was pretty much what everyone else experienced:
Target Canada is an unmitigated disaster. On that point, everyone, from its customers to investors to the company’s executives, can agree. In reporting its second-quarter results this morning, Target revealed its Canadian operations lost another US$200 million, while same-store sales — a gauge of performance that measures only those locations that have been open for at least a year — fell 11.4 per cent from the same period in 2013.
In a conference call with Canadian media Wednesday, Target chief financial officer John Mulligan declared: “We bit off way too much, too early. In retrospect, (we would) probably open five to 10 stores last year — refine the operations, refine the supply chain, the technology, get our store teams trained. But again, that’s all hindsight, we are where are right now and we’re focused on moving forward to fix this for our guests.”
It took Target from early 2011, when it announced the Zellers deal, to March 2013 before it opened its doors and could ring up its first sale. To date, Target has racked up $1.8 billion in losses from its Canadian operations. Here a good breakdown of the losses.
In Wal-Mart’s fiscal 1995 annual report, the retailer said its operating, selling and general and administrative expenses, as a percentage of sales, had risen just 0.2 per cent and 0.3 per cent in each of the previous two years as a result of the Canadian acquisition and launch. By Wal-Mart’s second year in Canada it had already generated an operating profit, having doubled sales per square foot since taking over from Woolco. By year two it boasted a 40 per cent share of the market.
It’s taken three years for Target to admit just how flawed the Canadian expansion has been. An atrocious inventory management system left shelves empty, while Canadians were completely turned off by Target Canada’s decidedly un-Target-like prices on goods.