Targeting the Target!

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While most of the businesses were busy opening up to the New Year, there were some who were busy closing down permanently.

Target, the much lauded American big box discount retailer, was one of them. On January 15, 215, Target announced its withdrawal from the Canadian market forever.

What do small business owners and budding entrepreneurs learn from this disastrous failure of a retailer that is one of the most reputed retailers in the US, dominating a lion’s share of the retail market?

There is a lot to learn

Did Target lack a sound business strategy? NO! Target has been in the US for more than a century with about 1,934 stores. It has been through many depressions, much political turmoil, several financial crises in the US and numerous changes in its own strategy. It doesn’t need anybody to teach it new tricks.

Has Target lacked any of the social and business ethics. No! It stopped selling firearms back in 1990s, even clearing the shelves off the real-looking toy guns. It has stopped selling tobacco products way back in 1996.

Has it not been respecting the environmental concerns? The answer again is a NO! It readily agreed to reduce its sale of items that had PVC, and recycled most of its in-house waste, and discontinued displaying hazardous goods.

Has it not shown concern about the society and cooperated with the local law enforcement agencies? Never! In fact, it let the crime investigating agencies use its “forensic” labs that it established to keep a check on the petty crimes in its stores and the goods it displays. In 2006 The Washington Post published an excellent new article appreciating how Target operated these forensic labs and how government agencies such as United States Secret Service, Bureau of Alcohol, Firearms and Explosives and the FBI itself used in solving general crimes!

Has Target not been philanthropic? It would be a sin if anybody said yes! In 2005, Forbes placed Target as the highest cash-giving company in America in percentage of income given. In 2014, Fortune magazine’s ‘World’s Most Admired Companies‘ gave Target 29th rank. Target donates about $ 3m a week to the communities where it has its stores. It generously allots a percentage of charges from its Target Visa to schools designated by the Target Visa Credit Card holders, with a sum of $150m donated to schools across the US through this program.

Is there anything that is found missing in Target’s Brand Strategy? No, nothing!

target canada pull out

Why then did this ideal retailer miss its target by a mile in Canada?

Target did not apply the same strategy in Canada. It was aggressive – opening 133 stores all over Canada to be in par with Wal-Mart and some other retail giants. Even if it was, what’s wrong in being aggressive with so much track record under its marketing belt and so much financial backing from the Mother ship – Target Corporation?

The two aspects that sent Target packing from Canada are ‘pricing‘ and ‘stocking‘ the store shelves.

Since the beginning, Target had somehow found it hard to keep its stores well-stocked. Customers had been grumbling about non-availability of certain day-to-day items. Though Target, realising the tear in the stocking growing wider, made quick amendments and stocked its shelves full, the damage had already been done and it was too late for it to patch it up. News travels fast, amazingly fast in this Internet era.

There have been some loyal customers who sympathised with their retailer and tried to ignore this flaw. The pricing, however, ignited the ire of some hard-core shoppers who found that prices in Canadian Target stores are noticeably higher than those in the US stores. Those Canadians who crossed the border to shop in the US, especially in Target stores, found themselves being fleeced when they had to pay more for the same item they bought in the US a couple of weeks ago.

Patriotism or jingoism, whatever you call it, is a very emotional feeling and once it rises, it ebbs with no amount of pacification, except with revenge. And that’s the conclusion one reaches after reading some customer comments in response to the news articles about the fall of the Target Empire in Canada. There have been blog posts which read: “…shoppers sentiments were hurt…!” Some consumers sympathised with about 17,600 employees who had been laid off, but, showed their anger over the discrimination. According to Andy Dutot, in his response to a news item regarding Target, Canadians were looking for the same value and treatment that US stores gave Americans. Some even said Target attempted a giant step before securing a toehold.

So what we learn from this debacle is what keeps our business from facing such situations. Aggressive marketing strategy works well with businesses that are unique, going into market without much comparison or competition. Pricing is crucial in running a business, especially a ‘discount’ retailer like Target where customers are strategically made to compare prices with other retailers’. (I mentioned the importance of pricing in one of my write-ups titled , with a different perception, though.)

In this regard, I appreciate Nordstorm’s calculating approach in the Canadian retail market. Nordstorm, as old as Target with about 118 stores in 38 states in the USA, took one cautious step at a time by opening one shop at the time while Target customers were getting restive.

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