Less than two years after joining the Canadian market, the retailer was forced to close all its 133 stores in 2015. The retailer exited the Canadian market after realizing that its operations were not going to be profitable before 2021. The failure of Target can be attributed to various factors. Firstly, the retailer started with a bigger foot print than was needed. Although the company`s expansion into the Canadian market was well planned for over two years, in the final stages, the firm hurried and oversized its market entry. Within ten months, Target had opened 124 stores. After purchasing 220 leases of a former discount store (Zellers), Target hurriedly went ahead and opened its first retail store despite the fact that major remodeling work was required. With so many stores launched within a short time, Target denied itself the opportunity to develop experience in the market and adapt its strategy before expanding further (Hitt, Ireland, &Hoskisson, 2016).
Secondly, the Canadian discount market is characterized by stiff competition, something that Target may not have fully appreciated. Compared to the luxury sector, the discount market in Canada has so many well established competitors such as Sears, Wal-Mart, Giant Tiger, and Costco. To attract customers in such a market, Target had no choice but to differentiate its offering from the rest of the competitors. It also had to meet the needs to two distinct customer categories: those who were familiar with the Target brand based on their encounters in the United States and those who were completely new to the brand. Although the company’s market strategy was a success, its execution was a mess. Consequently, Target`s stores in Canada were not at par with its stores in the United States. Specifically, the shelves were poorly stocked and had products that were different from those in its U.S. stores. Additionally, the prices charged were higher than those charged in its domestic market. Collectively, these factors discouraged traffic and made it even more difficult for the firm to win customers who were not familiar with their brands.
Hitt, M. A., Ireland, R. D., &Hoskisson, R. E. (2016).Strategic management: Competitiveness & globalization.Australia:Cengage Learning.