Way off Target

Target Corp. made front-page news earlier this month when it announced it was pulling the plug on its 133 stores in Canada after only two years of operating north of the border. The Minneapolis-based chain spent $4 billion to open the stores, which have since bled $2.5 billion in red ink. Company officials said the losses could not be stopped for six more years so they decided to quickly pull the plug. Now, I am no retail consultant (although I hope to play one on my upcoming Bravo reality series – stay tuned for more details) but if I were a retailing mogul I would have gone about entering Canada in an entirely different way. For starters, I would not have instantly blanketed the country with 133 stores. I would have begun with a handful of flagship stores in the key cities like downtown Toronto, Montreal and Vancouver, or near their major suburban shopping malls, to create a mystique and build some cache. With a handful of stores it would be easy to monitor what items sell best, and better study the Canadian customer. Even though Canadians are closely culturally aligned with Americans, Canada is still a different country with different customs and shopping habits. I remember the first time I went to Canada and stepped into a Sears store in downtown Montreal. Even though the logo on the outside was the same, inside was a totally different shopping experience. The Sears in downtown Montreal was decidedly more upscale than its American cousins, with eight floors of shopping, better clothing and more services, like a furniture department and sit-down restaurants. Interestingly enough, Sears Canada is capitalizing on Target’s demise by offering Target employees a Sears discount and urging them to apply for openings at Sears stores. Limiting Target’s initial Canadian foray to marquis stores in major cities would have served as powerful tourist draws, bringing in curious shoppers in from the suburbs who then would have gotten a taste of Target and demanded one in their neighborhood. Target officials could then have analyzed the shopper data to see which suburbs were the best to open stores and take it from there. Target got the bulk of its 133 stores by snapping up the Zeller’s chain from Hudson Bay Corp. Perhaps this was a once-in-a-lifetime opportunity. If so, the prudent thing would have been to keep the Zeller’s name, credit cards and loyalty programs and gradually introduce Target-branded merchandise and concepts. Over a period of years stores could have been remodeled one at a time to the Target banner and merchandising style. Another benefit is that this approach would have been “on the cheap,” which would have benefited the bottom line and Target shareholders. I’m not sure of the expense, but I can all but guarantee that it gradually remodeling stores would not cost $4 billion. Like I wrote earlier, I am not a consultant, but perhaps if Target followed my advice in Canada they would still be in business.