On January 15th Target announced its departure from Canada. This means closing all 133 Canadian stores, where Target will incur a $5.4 billion pre-tax loss in their fourth quarter.
Target had several issues when trying to enter the Canadian market.
In addition to the massive breach that is costing the company millions, it opened too many stores all at once, had several smaller stores with mediocre locations, higher perceived pricing, and huge inventory management problems. With its difficulty on the in-store experience, many Canadians gave up on Target all together.
Leaving Canada is no doubt a smart move for the company, as Target Canada didn’t catch on with consumers and they were “losing money every day,” according to Target’s CEO Brian Cornell.
The exit of the American big box will leave a gap in the Canadian retail market for many businesses to fill. This gap includes small and large businesses alike. With Target gone there’s opportunity for these companies to sell their own products and reach more customers: mom-and-pop shops and companies like the Hudson’s Bay Company, Canadian Tire and BestBuy Canada are just a few examples.
There’s also some negative impact to Target’s exit. These include the massive job losses, retailers relying on Target customer overflow, future deals with businesses supplying Target’s inventory, companies who were partnering with Target, and even smaller stores who needed to buy in bulk from Target to supply their own shops. In addition, landlords will also have a difficult time filling the vacant space that Target was leasing.
For example, the Globe and Mail references Cocoa Jewelry Inc., a company that was meant to design an exclusive jewelry line for Target. The company had spent over a year working with Target but couldn’t get their product on Target’s shelves.
So now what?
Target owes money to nearly 1,800 businesses and other agencies for over $5 billion owed.
Who is owed money? Small business, large businesses, the Retail Council of Canada, Revenue Quebec, The Canada Revenue Agency and a long list that is over 44 pages long.
It’s not all bad for Target Corporation. If Target were to stay they could have lost hundreds of millions of dollars every year for some time. If Target had been a more calculated with its approach, they could have saved this disaster and the company’s exit from our market.