Plowing through all of the analyses of why Target didn’t succeed in Canada (as well as a couple of opinions that said they would have succeeded if they’d only been able to hang in there and keep losing money for another 5 years or so) I was struck by two themes:
1: That they just didn’t do a good job. It seems there was a lack of diversity of products, even a significant amount of empty shelves and the prices weren’t all that enticing.
2: They ‘underestimated’ or ‘misjudged’ the Canadian market or thought it would be just like the U.S. only colder.
I am not a retail expert, but I can’t imagine it’s uncommon for large stores to stumble over a few things when they begin operating in a new country. Since I see lots of the same stores operating when I go to different countries, I can only assume that most of them somehow figure out how to make it work.
But this is a colossal fail, and I think that Target’s failure to understand the psyche of Canadians, and the impact those two observations above would have on that psyche, is what doomed Target here and was something they were never going to never recover from.
You won’t find this part of the Canadian psyche when you’re an American retailer conducting focus groups about coming here, because as an outsider you probably wouldn’t even know how to ask about it…but I think that deep within (a significant number) of Canadians there is still a combination inferiority complex/resentment when it comes to the United States of America.
I also think it’s natural for Americans to assume that the population of Canada is distributed probably pretty similarly to the America (if they think about it at all.) I’m not picking on Americans, I mean, why would you assume it was different? And probably most Canadians don’t fully comprehend that 90% of us live within 100 miles (160 km) of the US border. And 24.2 million Canadians – 78% – make a one day trip by automobile to the US each year (well, the actual statistic is from 2007, but I have no reason to believe it is not still essentially true.)
So it’s not like we’re in the UK and we’ve heard about this NFL thing and have seen it on television but haven’t been there in real life in the States and are delighted to have you come and put on a display at Wembley each year…we have SEEN WITH OUR OWN EYES what you sell and have available to the people in your country.
So when you come to OUR country and open your store and we know your stores down there have huge selection and great prices and we love you for it and you give us Canadians empty shelves and ho-hum prices…alot of people are going to think “Oh, I get it, we’re the place they send the stuff they can’t sell down there – kind of like the seconds discount outlet for a discount store. You keep all the good stuff for yourselves and think you can dump the rest of it on us dumb great white northerners.”
For me, this statement from a consumer quoted in Yahoo Finance sums it up:
“Shame on them for opening here with exorbitant prices compared to the U.S.,” said Lauren Tinto, 35, of Toronto. “They think we’re idiots or something.”
And once Canadians think that an American company thinks we’re idiots….well, now Target knows the answer. At a cost of $5.7 billion. American. Ouch.