For obvious reasons, the internet is abuzz with opinions and theories about the reasons for Target's demise in Canada. This article lists some of the most common theories, including poor inventory management, the effect of the exchange rate and social-media-enabled consumer complaints. Those are all valid and reasonable speculations. But the reason is far simpler:
There was no reason to shop there.
Target entered Canada two years ago, but they offered Canadians nothing they didn't already have. Whatever success Target enjoys in the U.S. is based primarily on it's aggressive pricing. But in Canada, the proliferation of Walmart stores (391 locations, compared to Target's 133) offers us access to all the $6 t-shirts and $10 watches we can handle. Canadians that already shop at Walmart have absolutely no reason to shop at Target instead.
In the U.S., interestingly, Target and Walmart opened their first stores in the same year - 1962. That allowed Target to create, over time, a loyal customer base that keeps it running. Walmart entered Canada 19 years before Target. That head start allowed them to fully establish a leadership position in the category - an insurmountable lead in customer loyalty that Target was unable to overcome. Especially with nothing unique to offer!
LESSON FOR MARKETERS AND BUSINESS OWNERS:
This unfortunate turn of events is more evidence to suggest that for any business considering entry into an existing industry, success or failure is based on your ability to demonstrate some form of remarkable differentiator compelling enough to convince consumers to stop shopping where they are used to shopping and start shopping with you.
A daunting task indeed.
Why do you think Target failed?
This blog is written by Glenn Cressman, Share Of Marketing's founder and Chief Share Builder (bio). It covers all things marketing. Feel free to comment!