Target execs take another run at Canadian marketplace with new mindset
After a fumbled launch last year, Target Canada executives are coming to terms with some of the company's mistakes and are making changes they hope will undo the damage.
Whether it was photos of empty shelves posted by Canadians across social media platforms or competitive prices that paled in comparison with its U.S. stores, the company says it knows work needs to be done to repair Target's reputation with Canadians.
Newly appointed president for Canada, Mark Schindele, said Tuesday that Target Corp. was too ambitious when it launched 124 stores and three distribution centres in Canada over a 12-month period starting in March 2013.
"If I could build a time machine and go back, we would've liked to have a slower approach," Schindele said in an interview.
"It was too much in too short a window. Our biggest issue (was) that we needed more time."
Schindele joined Target Canada from the company's U.S. operations where he held the position of senior vice-president of merchandising operations. He replaced Tony Fisher who was fired from the job earlier this year.
Now that Target executives have been able to examine where Target fell short, Schindele said he believes the company will be able to impress Canadians with prices that beat its competitors and exclusive products that will bring people back into its stores.
What went wrong with Target launch
Trying to understand exactly where Target went wrong is more complicated.
When it comes to empty shelves, Schindele said the company was moving too quickly to push inventory into its stores, which had "downstream implications" and left the company struggling to forecast when it needed to refill best-selling items.
And prices for about 1,000 items were off the radar in comparison checks with competitors like Walmart.
Target also didn't have the experience in Canada to determine which locations would sell out of popular seasonal items like barbecues, though Schindele said over the past few quarters it has come to understand the needs of each store much better.
Over the coming months, many of Target's plans will take shape, including a new price-match policy designed to make it easier for shoppers to take advantage of cheaper prices at competitors.
In addition to weekly flyers, Target will now honour price matches with several major online retailers like Amazon, and make it easier for people to claim lower prices at the cash register, rather than having to walk to the customer service counter.
A broader line of exclusive products will stretch from the apparel section, with agreements to carry more lines of Roots' Beaver Canoe clothing and a wider selection of maternity items. Target will also begin to stock plus-sized clothes for the first time in Canada.
While these are just some of the changes, Target still needs to win over shoppers who may feel burned by negative experiences over the past year. Schindele said he's confident that more exclusives and better pricing will help shift sentiment in Target's favour.
"It all starts with having the right content in the store, being priced right and the right inventory levels," he said.
"That's what will change our story."
Despite criticism Target to open 3 new stores
Analysts have been less forgiving, with at least one suggesting the company weigh an exit strategy to get out of Canada.
Credit Suisse analyst Michael Exstein said the new Target Corp. CEO should prioritize a decision on whether the retailer should take the money spent in Canada and funnel it back into new investments for the more successful U.S. business, which has recently faced its own trouble with a data breach involving consumer information.
Target Canada has been a costly investment, causing its parent company to post a US$1-billion loss in 2013 and another $211-million loss in the first quarter.
The Minneapolis-based retailer has also pulled back it second-quarter forecasts on rising expenses from promotional discounting at its U.S. stores.
As Target Canada works to manage its existing stores, the company is also opening three others later this fall, which at first glance seems to run against its own suggestions that it took on too many locations at launch.
But Schindele said Target can handle a few more stores, which will bring its total store count to 130 spread across much of the country.
"These are great markets and these are great locations," he said.