TORONTO (NEWS1130) – Target says it will discontinue operating stores in Canada, a market that it entered only two years ago.
The US-based retail company currently has 133 Canadian locations and 17,600 employees across the country.
The company says the stores will remain open during a court-supervised liquidation period and it’s working to ensure surplus employees are paid at least 16 weeks of severance.
Target says it will also work with an advisor to sell its real estate.
Target’s CEO says profitability was a long way off.
How far? 2021, according to Brian Cornell, who admits the retailer had a lot of work to do in getting more products onto its shelves, keeping them in stock, and pricing them right.
He says he’s developed a “better understanding of just how deeply [Target’s] entry disappointed Canadian shoppers.”
“I came to understand that we needed to see meaningful improvement in the sentiment of Canadian shoppers which would translate into traffic and sales,” explains Cornell.
But he says Target has not realized that improvement in sentiment, as sales and profits fell short of expectations in the holiday shopping season.
John Williams with Toronto-based consulting firm J.C. Williams Group says we should have expected this. “We certainly should have. They never got their act together. Basically, they never got retail 101 together.”
Target Canada has struggled from the start and there has been speculation in business circles that its days were numbered.
But as far as specific policy failures go, Williams says there were some prominent ones.
“I think their organization was ‘silo-ed.’ In other words, marketing wasn’t talking to operations, wasn’t talking to merchandise. They had some policies that if there was a shelf vacant, you couldn’t put something else there. You had to keep it vacant until it was filled with the merchandise that was supposed to be there. So those non customer-friendly policies sunk them.”
Williams says other retailers will quickly pick up the slack.
“They did a lot of business. So I think for sure, Walmart will pick some of this up, and then people like Giant Tiger, Winners… those type of retailers will. Maybe The Bay a little bit, maybe Sears a little bit. And believe me, the Canadian consumer is not a loser. They never really connected with our consumers.”
Its parent in Minneapolis said Thursday that it expects to spend between US$500 million and US$600 million in cash to discontinue the Canadian operations.
Shoppers blame prices for Target’s Canadian failure
People at Target’s Richmond location at Lansdowne Centre say the prices never really met their expectations.
“I guess I thought the prices would be cheaper, like the States,” says shopper Alissa Klimek. “But I guess they just compared to Wal-Mart — they’re kind of the same. I thought they’d be cheaper.”
Others blame the service and lack of staffing.
“The service was really bad,” says Sarah Barahmehi. “I know that for a fact. I know that I can’t ever get help when I need it. I know that I’ll be wandering around the store, and I’ll ask for help and they just never arrive for five, 10 minutes and then I’ll actually have to go ask three or four times before someone comes and assists me.”
Despite their complaints, most shoppers we spoke with have expressed disappointment at losing another shopping option.
Ottawa says it’s taking action to make sure Target workers find new jobs right away
Ottawa is offering direct assistance to the more than 17,000 Target workers who will lose their jobs.
Target workers will be getting some help in their search for a new job. Employment Minister Jason Kenney says a special employment insurance code is being set up to expedite their claims and the department will hold information sessions to direct them to in-demand jobs and tell them how to apply.
While the Conservatives try to deal with news, NDP Finance Critic Nathan Cullen is trying to put the blame on the government, saying the Tories approve these foreign take-overs without proper rules, conditions, or punishments. “Conservatives relying on an old strategy that has clearly failed, not only these particular workers, but I would argue more broadly, the Canadian economy.