Target to blame for its own demise: analysts

After less than two years of trying to win over Canadian consumers with its bold red and white bulls-eye logo and promise of affordable style, Target Corp. is walking away from its Canadian operations, saying it can’t make a profit north of the border.

The U.S.-based retailer, which entered the country with great fanfare in 2013, has lost billions and said it didn’t expect to turn a profit for another six years.

Is Canada’s vast geographic landscape and changing consumer tastes to blame for Target’s failure? Or, did Target simply miscalculate the Canadian market?

Experts are taking aim directly at Target.

“Target blew it,” says Doug Stephens, founder of the Retail Prophet consultancy.

“The Canadian retail market was not as robust as Target and others believed it was going in.”

Stephens says they opened too many stores, too fast and took substandard locations that didn’t fit with consumer expectations of the brand.

He said Target also failed to merchandise and stock their stores to acceptable levels and “spent a year making excuses for it instead of dealing with it.

"It all added up to an insurmountable failure that was costing them close to a billion dollars a year.”

David Ian Gray of DIG360 Consulting Ltd. describes it as one of the biggest misfires in corporate history.

“It’s definitely Target’s fault,” says Gray. “Consumers never really fell in love with Target up here.”

Gray believes the launch was overhyped and the company took on too many stores at once.

“It seem audacious to get 133 stores online in over a year over that span of geography and to build a distribution network at the same time,” Gray says.

Target Canada has struggled from the beginning when customers complained of empty shelves and were surprised prices weren’t as low as anticipated.

The retailer vowed last year that it would shape up its operations to better serve consumers. It gave up after a disappointing holiday season.

On Thursday, the company said it filed an application for protection under the Companies’ Creditors Arrangement Act.

Instead of trying to further fix its operations, Target said it would pull out of Canada, closing its 133 locations across the country, a move that will affect 17,600 employees.

"After a thorough review of our Canadian performance and careful consideration of the implications of all options, we were unable to find a realistic scenario that would get Target Canada to profitability until at least 2021," Target chairman and chief executive Brian Cornell said in a statement.

"Personally, this was a very difficult decision, but it was the right decision for our company."

Target’s entrance into Canada led to wide-sweeping changes across the industry. Rival Wal-Mart expanded its stores and offerings in response, while Amazon.ca ramped up its product list online.

Gray doesn’t expect retailers to let up the gas on their drive to compete for Canadian consumers.

“I don’t think anyone is going to have anything to say other than condolences,” says Gray. “But there will be a few smiles around the boardroom tables in Canadian retail big and small. For the guys that are still kicking, it gives them a little confidence. They can rally their group and say ‘we’re succeeding where someone like Target has failed. Let’s roll up the sleeves and dig in harder.”