Target quitting Canada after $2B in losses

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(Updated)

Two big name retailers are leaving the country and the employees say they never saw it coming. Some 17-thousand people are going to lose their jobs in Canada in the coming weeks the majority of them work for Target.

The American retailer is pulling out of Canada.

Target employees at the Niagara Falls store walked out at the end of their morning shift in shock.

“I just don’t understand why they all have to close. It’s very sad. We’re all really, really upset.”

They’re upset, and angry, and afraid.

“Emotional, very emotional for sure.”

There are more than 17-thousand employees at Target stores in Canada. Employees we talked to this morning were blind-sided by the closure news.

They’ve been told the stores will close by the spring.

“There’s no confirmed day. They say it’s going to be within 16 weeks.”

“It’s kind of sad. I love Target. Liz Cressman prefers to shop at the Canadian Target stores. But so many other Canadian shoppers do not. Dorothy Vanamelsvoort and Ruth Brown were at Target in Niagara Falls, New York today.

“(Are you surprised?) No. (Why not?) It just wasn’t the same there as it is over here.”

Shoppers compared and complained about the products and the pricing and the presentation of the merchandize at Target Canada.

“And I didn’t see a big difference from Zellers to be perfectly honest. They changed the colour. Yet it was all set up the same way.”

“Some people would say Target is a bad store. But it wasn’t. We put our all into it. I just don’t understand our store. We were on top. Niagara Falls was one of the top stores.”

This is not a reflection of the employees at the store. Critics say it’s more about corporate incompetence. Some analysts calling it the biggest blunder in retail history.

Before it arrived less than two years ago, Target seemed like a sure thing. Which is what makes today’s news such a surprise for some. But it also begs the question — how could such a powerful U.S. retailer fail here in such a short time?

For those who call Canada the 51st state, today is a stark reminder that we are not. A different nation means a different market and it’s clear that Target didn’t do their homework.

You can say they dropped the ball, or missed. But Target is abandoning its huge 133 store Canadian expansion after less than 2 years.

Brian Cornell: CEO: “Put simply, we have not seen that change in performance that we told you we needed to see.”

Target CEO Brian Cornell says that with the current landscape they don’t project their Canadian operations would turn a profit until at least 2021.

It started with huge hype. Shoppers who lined up at this pop up store in February of 2012 were eager: (From 2012): “They have the designer collections every year so that’s big reason of my wanting it to be in Canada.”

But when the doors officially opened a year later, shoppers were faced with higher than expected prices, and shelves seemed constantly empty. In year one, Target Canada lost a billion dollars.

A promotional video stated: “It might take us a little bit longer than we thought to get there, but I promise we will.”

Just this summer, Target released the promotional video, admitting that year one had been a struggle, and reassuring Canadians that they were here for the long haul.

But for all its issues on the business side, experts say that it came down to one thing: They were never quite able to bring the experience or identity of Target U.S. up to Target Canada

Steve Tissenbaum is an instructor at the Ted Rogers School of Business at Ryerson. He says that there is a unique feel that Target has in the U.S. despite being a discount retailer: “The high end of the low end. That it’s really, it’s tar-jae.”

He says that Target’s U.S. stores have a certain experience, a certain look and feel that elevate them above other discount retailers. He thinks that the arrival of other U.S. retailers like Saks Fifth Avenue and Nordstrom’s may have helped hasten their exit.

Tissenbaum: “Competition is coming and they’re running.”

He also said Nordstrom’s and Saks 5th Avenue will likely be in a better position because they cater to a high end customer clientele. And they will also have a test case on how not to enter the market thanks to Target.

Additional video: Marvin Ryder from the DeGroote School of Business analyzes the Target move:

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