Target had its share of problems since launching its Canadian operations in 2013. The most talked about problems were supply chain issues and mysterious price perception concerns (despite objective data showing that Target was actually Canada's lowest priced retailer). Ultimately, these problems were cited as explanations for Target's January 15th decision to close up shop. These problems did not necessarily need to be the deathblow to Target Canada. Instead, it was a lack of will on the part of the CEO and the American leadership team that sealed Canada's fate.
It's important to note that it was never Cornell's idea to expand into Canada. Bringing Target to an international market was the dream of former CEO Greg Steinhafel. It was an ambition plan that involved opening over 120 stores in a single year. When other brands have attempted international expansion, they have waded in slowly; testing a small market of 5 stores or less, course correcting as needed. Any issues that arose during the Target expansion quickly spiraled out of control due to the massive scale of the operation.
The single biggest issue that plagued Target Canada was filling their shelves. Ever since grand opening, no Target Canada store ever reached 80% stock levels. When you're in the retail business, having product on the shelf is an absolute must. Even though this was a critical problem for Target, it never should have been a deal breaker. With the muscle power that Target Corp has, this issue could have and should have been corrected within a couple of years. And it did, slightly, under Steinhafel's leadership.
Steinhafel was dealt a double-whammy when a holiday season security breach in the United States forced him to take his attention off of Canada's woes for a couple of months. This allowed Canada's stock issue to fester and infect the reputation of Target in the northern stores. Before Steinhafel was able to dig back in and make things better in Canada, Target had fired him and replaced him with Cornell. From that point on, Target Canada's fate was sealed. Target had shown absolutely no improvement in regards to their supply chain since the appointment of Cornell. Why? Had Target suddenly forgotten how to fill up a store? No. Targets in the USA were still boasting deeply filled shelves and record sales. The reason in simple: Cornell had given up on Canada.
Some people have been comparing Target's fall to the demise of Zellers, a brand that previously occupied many of Target locations in Canada. It's a poor comparison however, because it's a very different tale. Zellers was an old brand, struggling for years, that was finally put to rest after many attempts to save it. Target Canada, however, was the victim of corporate infanticide. It was a young brand with a ton of potential that was intentionally and deliberately allowed to die. It was neglect, not inability, that killed the project. Target Canada was a failure in the same sense that a house plant is a failure when it is not watered for 681 days.
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| A typical line up at Target Canada stores across the country the day after it was announced the company would be ceasing Canadian operations. Massive crowds of loyal Target guests came out to support the doomed retailer. |
Brian Cornell has said publicly that they considered all options before deciding to close the Canadian stores and has concluded that this is the best option. This is not true. Closing the stores is the easiest option, but not the best one. It was a very hands-off and easy decision for Cornell to make. He did not visit the country's most profitable stores in order to see how vibrant Canada could have been, During the holiday season, Cornell hand picked a few stores to visit, which just happened to be Canada's worst performers (locations that many industry insiders believed should have been closed). Based on the lack of foot traffic seen in those locations, Cornell justified his desire to shut down the entire project.
And with that, Target and Canada had severed tied. With a blast of a single press release, 17, 600 people were out of a job. Rather than internal memos or conference calls with store managers, most staff were notified of their upcoming unemployment when they watched it with the rest of the nation on CBC news. Target had packed their bags and were already running for the border before anybody knew what was going on. All they left behind for the Canadian staff was a $70 million trust, erroneously (possibly deliberately) described to the media as severance pay, though in fact this is simply regular working wage for staff involved with liquidating the stores. And those are the lucky ones. Target Canada's pharmacies operated on a franchise model instead of corporately owned pharmacies as they have in the States. This means that workers and owners of the pharmacies are not due any "working severance" pay. Instead they're left with mountains of debt, some ballooning over half a million dollars, as they clear out their one year old pharmacies and say goodbye to their ever-growing client base. Thus far, Target has offered no assistance to their franchisees and has refused to answer any phone calls or emails from pharmacists. Cornell is truly washing his hands of the whole situation and says he has already turned his attention to building Target's digital strategy in the United States.
In all fairness, Brian Cornell is the CEO and is well within his rights to close any store he wants. But the way he is doing it and the excuses he is making is unfair to the hard working Canadians who committed their time and energy to his corporation. In shutting the doors, he should do what any good leader does: accept responsibility for his failure.
