Canadians were shocked last week when American retailer Target Stores decided to pull out of Canada after only 18 months and a 2 billion dollar investment. I call the move reckless and short-sighted and if I was an investor in Target Stores in the U.S. I would be pulling my own stock investment pretty quickly. Even though the stock market liked the initial move with an increase in stock price, management decisions of this magnitude show that the retailer cannot be trusted to build a market and value long-term and would not be seen as a secure performer in many stock portfolios.
Target is blaming the pull out on the Canadian public and their lack of sales and support for Target stores in Canada, when in reality Target failed to live up to its brand promise and basically let its audience down. A strong brand promise is the one thing that connects your purpose, your positioning, your strategy, your people and your customer experience. It enables you to deliver your brand in a way that connects emotionally with your customers and differentiates your brand.
As a Canadian who had experienced Target stores in the states, I was excited about the possibility of a new, modern and influential discount retailer coming into Canada and bringing some good old American know how to a pretty lame retail market place consisting of Giant Tiger, Sears, Walmart and Canadian Tire stores.
Unfortunately after the first visit it was clear that whatever good will had been built with the brand in the U.S. it was sorely lacking in Canada. Brand promise is the most important part of a marketing strategy. It means everything. It’s unfortunate that besides investing $2 billion, hiring 17,000 employees and embarking on opening 139 stores, Target forgot what its brand promise is and ignored that in it’s Canadian launch.
We were excited about the store, and its opening only to be disappointed with the stores and now even more disappointed with the company now that they have decided to pull the plug after only 18 months.
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Brand promise is also often overlooked by presidents, senior executives and leaders in many companies in their haste to just get something done. It takes years to build and can damaged in minutes as is clear with the Target Canadian execution.
I must admit that I was beginning to like the store. I had been in a few times and besides a few empty shelves I gave the company the benefit of the doubt because I knew they were just starting. I had already experienced Walmart and Canadian Tire many times and liked the laid back feel of Target, the opportunity to buy a Starbucks on the way out the door and unique selection of products at fairly responsible prices. I think other Canadians felt the same way and would gradually warm up to the idea that there was a Target store in their area. However, as fast as they made the decision to get into the market they made the same crazy half-assed decision to get out, which really impacted the brand even further.
Unfortunately, the market will never look at Target stores the same way. The mystery and the good will in the brand have been dashed by short-sighted stupidity in regards to the initial execution and the limited tenure by the company in Canada. It’s not Canadian shoppers who are the problem but lack of management at the top and that’s too bad as its going to take years for Target to ever be a leader in any retail market due to lack of brand promise and a short-sighted, misguided retail strategy. A recent Globe and Mail market referred to a management team that would not listen to the market and needs of suppliers, staff and Canadian customers. In regards to marketing, good market research said that Canadians would embrace the brand, they tried but Target’s management just failed to deliver.
So not only did Target fail in Canada, it also seems to be the beginning of a slow decline of a retail chain not only for its failure here, but that fact that it is happening here means that the same stupidity is bound to continue and failure in the U.S. is likely not that far behind. With the same management in place, its time to sell those Target shares, as in five years they may not be a force in the U.S. market either.