Target Corp's spectacular Canada flop

Target Canada will serve as a gold standard case study in what retailers should not do when they enter a new market. From opening too many stores at once to a lack of a sales website, Target took multiple missteps in order to flop as spectacularly as it did in Canada, the sum total of which resulted in a group of highly disenchanted consumers. "We missed the mark from the beginning by taking on too much too fast," chief executive Brian Cornell said as the company announced it is shutting down its 133 Canadian stores and laying off 17,600 employees just two years after its much-anticipated launch. The pace was meant to vault the company to the scale of an industry leader capable of competing with Walmart as it had done in the United States. That strategy skirted the path most retailers take in making their first international forays: opening a few test stores and tweaking them in response to consumer demand. If there is evidence of a good appetite, the company can open more. It didn't help that some of the locations were former Zellers Store B-list and C-list malls. Then Target got into hot water early with customers because of its pricing. Though market studies revealed the retailer's prices were close to Walmart's and even beat its prices on a number of household items, Target opened at a time when the Canadian and U.S. dollars were close enough to par for consumers to wonder why pricing was not the same on goods in both markets for like items. Canada has a different currency. Sure, it uses dollars, but at the time of this writing a Canadian dollar is worth only 72 percent of an American dollar. That conversion rate is constantly fluctuating. Also, Canada uses the metric system. To the people in the U.S., a 2-foot deep shelf is a 2-foot deep shelf. In Canada, that shelf is 60.96 centimeters. "We were not as sharp on pricing as we should have been, which led to pricing perception issues," Mr. Cornell said. "As a result, we delivered an experience that didn't meet our guests' expectations, or our own." Canadians were also disappointed that some product lines available at Target's U.S. stores were not being sold in Canada.

But it was the logistical challenges that started when Target's Canadian stores first opened, ones that arose in part because Target was using an entirely new set of systems, supply chain infrastructure and third-party logistics providers in Canada, that proved to be the retailer's Achilles' heel. Executives, quite naively perhaps, had expected that a handful of Target Canada stores that opened early were sufficient to adequately test the new systems. They were wrong. The ensuing logistical chaos resulted in gaping store shelves and flyer items that were sold out on the first day of advertising. "When you have computer-assisted ordering, which most retailers have, when a computer does the orders instead of a stockkeeper manually going up and down the aisle, the systems are designed to automatically reorder and replenish the store shelves when [the item] hits a minimum number. "If your units of measurement are messed up, you can throw computer-assisted ordering into a tailspin," Mr. Wulfraat said. "All hell can break loose." At the same time, retail competition in Canada was fierce when Target opened in the spring of 2013, much tougher than Target executives had initially expected it to be. In retrospect, Target's two-year lead time from the announcement that it had bought Zellers' leases in 2011 gave the likes of Walmart, Canadian Tire and Costco ample opportunity to expand or sharpen their businesses in the interim. Technology hurdles were not limited to its supply chain and systems. Perhaps the biggest strategic retail lapse Target made in a country with a leading rate of Internet use was to open a new retail chain without a website to showcase its goods and prices something all of its rivals had long done. "Each year we are seeing a compounded 12% to 15% year growth in e-commerce sales in Canada. To not have a website serving Canadians at this critical juncture is really a problem. It is not all about the sales you process on your website, it is the degree to which consumers now pre-shop online, deciding what they want and then go to the store and get it or buy online and pick it up in the store." After Target failed to live up to customers' expectations in multiple ways, shoppers became alienated and not enough of them returned, Mr. Cornell said. "We delivered an experience that didn't meet our guests' expectations, or our own. Unfortunately, the negative guest sentiment became too much to overcome. While we made some recent progress, the changes were not enough to inspire the guest to shop Target. The losses were just too great."

QUESTION 1 Highlight and discuss a total of FIVE (microenvironmental and/or macroenvironmental forces) that affected Target negatively and led to its failure in Canada. Specify whether they're micro or macro-environmental and name them. Substantiate your analysis with information from the case.

QUESTION 2 Target was positioning itself as competition for Walmart. As a Marketing Manager, describe THREE targeted segments fully using as many segmentation variables as you can. What could you have done differently to rescue Target? Find an additional segment you could have targeted. What is it? Describe it fully.

QUESTION 3 Describe the positioning strategy that Target had in Canada. What was their competitive advantage? What could they have done differently in their value proposition in Canada to avoid this failure?

QUESTION 4 Target closed all their retail stores in Canada at once. What would you have done if you were hired as a Marketing Director at this time? Would you have taken the same decision? Evaluate and discuss their distribution/marketing channels strategy while they were operating. Is there anything you would have recommended changing to save them?

QUESTION 5 If you were a Marketing Director for Target, review of ALL the elements of the promotion/IMC strategy of Target. Is there anything that needed adjustment to assist the

QUESTION 6 Identify and explain ALL the constraints on the pricing strategy. Discuss it fully.

QUESTION 7 Imagine that Target had hired you before they made a decision to come to Canada, what is the advice that you would have liked to give them as they expanded their marketing efforts in North America? Is there a preferred method for entering the Canadian Market?