Target of course is the Minneapolis-based discount retailer. The chain had a reputation for being a place that made discount stores chic and exciting. It was the hometown store, the local kid that made good. Going to Walmart was a chore, but going to Target was hip and cool.
So, when Target announced in 2011 that it was going to open stores in the Great White North of Canada, I was excited. The cool and hip retailer was going to the place that I’ve had a fasination with since I was a kid. Where I grew up in Michigan was about an hour in two directions to Canada. So, you could easily watch the local Canadian Broadcasting Corporation TV station from Windsor, Ontario. I would make it a point to watch their version of the evening news to learn about the issues my neighbors to the north were facing. I guess that makes me a bit of a canadaphile.
As we all know now, Target’s entry into Canada has been a disaster. After only two years Target is pulling the plug on it’s Canadian stores, shutting them all down and throwing some 17,000 people out of work.
A lot of experts think Target did right in shutting down a losing operation, especially one that probably wouldn’t be profitable for another six years.
I think it’s a dumb idea for reasons I will explain. But the whole fiasco has caused me to re-evaluate my support of the bullseye. The debacle uncovered some of the problems with the retailer problems that the Candadian closure and the sacking of thousands at the Minneapolis headquarters will not solve because the company is focused on profits instead of something more basic: customer service.
There are a lot of reasons batted back and forth about why Target didn’t work in Canada. We know all the stories about empty store shelves and prices that were more expensive than competitors. But at the heart of it all, is the fact that Target stopped focusing on making sure the customer (or guest in Target-speak) had a good experience. I think the retailer had a certain arrogance that they would win over the Canadians with being Target.
Target was in many ways copying what another American retailer did to gain a foothold in Canada: WalMart. The Arkansas-based retailer entered Canada in 1994 when it bought over 100 Woolco locations just as Target bought over 100 Zellers locations. But that is where the similarities end. This is what the Minneapolis Star Tribune notes about Walmart’s entry:
Wal-Mart’s jump into Canada came back in the early 1990s, well after Wal-Mart had emerged from its rural roots to become a retail juggernaut. One of the retailers then on its way out of business was Woolco, the discounter started by the once-dominant retailer F.W. Woolworth Co.
The American Woolco stores were finished by the early 1980s, but the chain was able to hang on longer in Canada. As Woolco up there was nearing its end, the New York Times reported that all the rumors in the financial markets in Canada seemed to point to just two likely buyers, both looking to acquire the chain and quickly reopen its stores as their own. One was Wal-Mart and the other was Dayton Hudson Corp. of Minneapolis, as Target was known back when “Target” meant a division.
It was Wal-Mart that made the deal, buying the Woolco stores for about $350 million. Unlike what Target did with the sites it acquired from another fading discounter, Zellers, nearly 20 years later, Wal-Mart from the date of its announcement in 1994 promised to hire everybody, from the Woolco president on down.
Wal-Mart then let the Canadians run the show. Wal-Mart made the chain part of its international division, acknowledging that Canada is not just some really big state north of Minnesota.
Wal-Mart also didn’t close the Woolco stores to renovate them into new Wal-Mart stores, keeping them open through the whole conversion.
That’s a messy task, a little like repainting a car as it rolls down the street, but Wal-Mart didn’t want to let the Woolco customers establish new shopping habits. A customer who came to a store every month to get prescriptions filled at the pharmacy might not come back if it closed even for a short time.
“The piece they really got right was that they put their focus on operations first,” Sherk said, referring to things like keeping the shelves stocked. “Retail is attention to detail. Wal-Mart can do that very well, and they did that in Canada.” (Emphasis mine)
The writer doesn’t want to say that Target didn’t pay attention to detail, but that’s exactly what happened with Target. Target didn’t launch as a Canadian operation, but as an extension of their HQ in Minneapolis. Or as article in Huffington Post Canada noted, Target saw Canada not as nation with its own peculiarities, but as the 51st State. Irony of ironies, Walmart, the chain that we like to think is the Ugly American is the one that got it right.
Part of the problem with Target as a whole is that it doesn’t pay attention to the details. I’ve started to notice this over the years of shopping at the retailer. For example, the infamous problem in Canada of empty shelves is not unheard of in the States. Now, I usually shop on Sunday evenings so you might expect empty shelves and that has happened as I walked down the grocery isle. But the thing is, I’ve gone to other retailers on Sunday evenings and their shelves are well-stocked. Why is that a problem for Target. Related to that is that if you go grocery shopping you will realize when you get to the checkout that there are certain items that aren’t available at the bullseye. So, in essence, you have to go to another store to get something that isn’t at Target.
Then there was the time that Target pharmacy messed up a perscription. For the most part the guys at the pharmacy are great, but no one is perfect and they really messed up. I kept waiting for a certain drug to be refilled and for them to tell me when it was ready. I came by a few times during the month and never recieved the drug. I finally came and asked for the refill. Turns out it had been filled and sat in the bin for several days before it was returned. Instead of filling the prescription that they messed up, I was told that they couldn’t do that. They could give me a few tablets for a few days and a week or so I could ask for the refill. Instead of helping the customer and trying to fix a mistake they made, I was made to feel like it was my fault. This is poor customer service and I’m still upset about it and this took place almost a year ago.
Target has a problem on both sides of the border in not focusing on details. I think people think about big ideas and tend to not look into the nitty gritty, the things that can make or break of retailer. The problem in Canada isn’t that they opened too many stores at once. It’s that they didn’t really take the time to think about how to serve the Canadian customer. They didn’t do the most basic rule of business: know who you are selling to.
Target is trying to restructure which mean the loss of 1700 positions in Minneapolis. It will also mean trying to get the reputation for cheap chic back. They seem to believe that mannequins will turn the company around. And organic food (umm, Walmart has been focusing on this for nearly a decade, guys). And not stocking winter items in Florida. As you can tell, I don’t think this is going to make a difference. What might make some difference is the opening of smaller stores, like Target Express that opened in Minneapolis last year and St. Paul this year. But even that might not be enough. One of the reasons Target went into Canada was because they were tapped out in the States.
(A Wall Street Journal article from 2014 notes that prior forays into fresher food didn’t do so well.)
If I were the CEO of Target, I would have kept the Canadian stores open. Well, most of them. Close a chunk and then work on the remaining ones. Create a Canadian division with their own headquarters in some Canadian city and staffed by…wait for it…Canadians. See the failure as a chance to turn things around and offer better customer service. Beat the forecasts that said that Canada wouldn’t make a profit until 2021. Focus on the details.
Target is where it is because it hasn’t focused on the details. They are a long way from their founder’s beliefs when George Dayton started the company a century ago:
The company now known as Target was founded in the early 1900s by a New Yorker named George Draper Dayton, who carefully conducted market research before forming the Dayton Dry Goods Company and selecting a location that fit his strategy. Dayton had a reputation for solid stewardship and he ensured his company was dependable when it came to merchandise. He was also big on inventory management. When a freight-handlers strike in 1920 threatened the company, for example, Dayton immediately moved to prevent empty shelves from dissatisfying customers by deploying airplanes to transport goods across the country, which was revolutionary at the time. Loaded with inventory, the planes were paraded through the streets of Minneapolis, demonstrating the lengths to which the store was willing to go to please its customers.
After leadership passed to other generations, the company remained meticulous about planning. This didn’t change in the 1960s, when management decided to introduce a new kind of mass-market discount store for “value-oriented shoppers seeking a higher-quality experience.” Indeed, as the company set out to combine department store features (fashion, quality and service) with a discounter business model, the transition that was widely seen as risky was made less risky via slow, careful planning.
When Target initially launched, it started with a handful of stores around Minnesota. And management made sure the new business made a good first impression by paying attention to details that made the experience “fun, delightful and welcoming.” As newspapers noted at the time, the store had wide aisles, easy-to-shop displays, fast checkouts and plenty of convenient parking. The Target name and logo were also carefully selected to send a message. “As a marksman’s goal is to hit the center bulls-eye, the new store would do much the same in terms of retail goods, services, commitment to the community, price, value and overall experience,” notes the company history.
It’s way past time for Target to be on target again. Mannequins aren’t going to save Target. George Dayton knew customer service was paramount. It would be nice if the current leadership remembered that.
Update: An anonymous employee at Target headquarters in Minneapolis wrote to Gawker last year about life inside the corporate office. It was not pretty:
Target HQ is in bad shape and in desperate need of help, direction and vision, starting from the top down. [Former CEO] Greg Steinhafel getting fired was a good step, along with the CIO being fired a few months ago, but it’s not enough. The entire executive team with the exception of the CMO Jeff Jones needs to go. Why? Because everyone was homegrown and “Targetized” and has no concept of how to run a 21st century business. They still think it’s 1996 and you can keep throwing up Target stores and suburban moms will love them. They pay lip service to how retail is evolving but it when it comes to actually making good decisions, they do horribly. When I started, they were so excited about getting “Buy online, pick up in store” as if that was some new invention. How many other stores have that and do it better than Target? Regular customers don’t even know about it, because people hate Target’s website. They’ve tried starting a Netflix like service, or a subscription service, but no one knows about them and they are just copycats of what other businesses are doing. Target has no original ideas, they are just reacting to what other companies are doing and jumping the bandwagon. They have a culture that makes decision via consensus, so it takes FOREVER to make a decision and implement even the smallest change. That keeps them from being able to make the necessary changes, and they won’t ever get there without a big change in leadership and a true vision beyond “keep the doors open”.