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Thursday, January 15, 2015

Target to Close All 133 Canadian Stores: Good Riddance

In theory, I have no objection to American retailers setting up shop in Canada. In practice, I have very strong objections to the way they go about it: Home Depot and Lowe's drove many local hardware stores out of the market; Wal-Mart's prices killed Bi-Way and other discount department stores, all while degrading labour conditions and the place of unions in Canada. Target killed Zellers, and now it is killing itself.


Target's 2013 entry into the Canadian discount retail market was accomplished by buying out Zellers, then closing all the unionized locations. For instance, the popular Zellers at the Oshawa Centre never became a Target because it was unionized. The building's footprint is now a parking lot. With the unions safely out of the way, Target set about rebranding the remaining locations.

Many Canadians were excited to have a retailer renowned for its low prices coming to Canada. However, right from opening day, excitement turned to disillusionment. Prices were significantly higher than in Target locations south of the border and the selection was poor, with many shelves empty.

In what is a spectacular case of corporate arrogance, Target felt it could dupe Canadians by providing a retail store that was a lame copy of its American locations. They were wrong. Target Canada lost $1 billion in the first year due largely to poor sales. Future business textbooks looking for an example of 'how not to launch a retailer' need look no further than Target. Two years in, Target has decided to cut its losses and run. Good riddance to corporate greed.

That said, there are no winners here. Target is set to lose its shareholders yet another $500 million during the liquidation process; nearly 18,000 people will lose their jobs; Canadians will lose 133 places to shop; and Wal-Mart will increase its market dominance. Yes, there will be severance for the employees, but in an already iffy economy (thank you dominance of the oil sands), how much will that really help?

>>> Target to close all 133 Canadian stores, gets CCAA protection - CBC News <<<

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