Missing the Target

Retail Value PropositionKyle B. Murray is the author of The Retail Value Proposition: Crafting Unique Experiences at Compelling Prices. The Retail Value Proposition introduces a new and effective way to manage those experiences based on three critical factors – environment, selection, and engagement (ESE) – that separate successful retailers from those that fail and are forgotten. The ESE framework is derived from the academic literature on retail management and consumer marketing, and supplemented by hundreds of hours of interviews with executives and marketers from Canada's leading companies, including Loblaw, Indigo Books and Music, and Lululemon. Murray is currently working on a US edition of The Retail Value Proposition.

Few retailers have ever come to Canada with more hype and excitement than Target. Canadian consumers who had shopped Target in the U.S. were telling their friends what a fantastic experience the retailer offered. Fashionable apparel, high quality housewares and home decor, convenient grocery shopping and all at prices that threatened Walmart.

By purchasing Zeller's real estate, Target was able to open more than a hundred stores within months of entering the country. The company hired more than 17,000 staff members and actively acquired top talent from Canadian competitors. With good lease deals, an incredibly strong brand and Canadian consumers clamouring for the Target experience, pundits predicted a revolution in the national retail industry.

Then Canadians went to the stores. The first response from many consumers was that the the stores looked a lot like Zeller's (which wasn't a compliment). Then shoppers noticed how understocked the shelves were and how poorly the products were merchandised. Flyers would go out announcing fantastic deals on fashionable clothing, but when Canadians arrived at the store those items were no where to be found. The prices were not as low as expected. Overall, Target was creating a lot of disappointed customers. As a result, one of the world's most successful retailers was unable to survive even two years in the Canadian market.

I was still surprised to hear that they are leaving Canada entirely. This follows on news that other once successful retailers -- including Mexx, Jacobs, Sony, and Laugh & Learn -- are also closing their doors. Some landlords are looking forward to replacing Target with an anchor tenant that can draw larger crowds, while for the others the future without Target is quite unclear. The Canadian retail market is still one of the most attractive in the world. It will be interesting to see who fills the void that Target leaves behind and whether or not this market opportunity will attract any new players, such as the fast growing Irish retailer Primark or maybe even an innovator like Trader Joe's. Whoever takes on the challenge needs to learn from Target's mistakes and keep the Canadian consumer at the heart of their strategy.

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