Target Canada Poised to Head Back to the US?


The ambitious entry of Retailer Target appears to have backfired and the chain is now saddled with massive losses amounting to $941 million with more in the pipeline to be added and taking it closer to the $2 billion mark in losses! This would translate to about $1 billion every year during the first two years of its operations in Canada.

The huge security breach in January and the more recent and abrupt departure of Gregg Steinhafel, the CEO of Target are being seen as the primary reasons for the poor showing by Target in Canada. Another major contributor to the current situation according to analysts is the empty shelves and therefore, the lack of selection for those who customers who are still coming. Although some retail analysts do feel that a new CEO can indeed help a massive turnaround and put Target on course towards its goal of $6 billion in sales by 2017. 

Opening 124 stores in just about 10 months has been seen as yet another aggressive but faulted approach. The empty shelves scenario that continues to aggravate the situation can be remedied only through fresh investments. Given the current financial performance of Target, garnering fresh investments could also pose a great hurdle. The security breach leading to debit/credit information of millions of Canadians being exposed has already made the customers somewhat wary of Target.  Plenty would need to be done to obliterate this smear and take the Retail chain on to a stable and strong road to growth.

Employee morale is another factor that could seriously impact Target’s plans. Initially employees were trained in the US and when they were put on actual work in Canada, systems and technology were different. Add to this, the problems caused by low inventory and employees being asked to do more ‘cosmetic’ work to give the store a ‘full’ feel rather than the jobs they are actually paid for, the road to doom presently appears well cut out.

Falling inventory, and employee morale are potentially the twin problems that the interim CEO or a new CEO will need to take head on. Both these can be challenges of the tallest order for most seasoned CEOs to handle with any assured degree of success. If the exercise takes too long to bring the desired results, employee attrition will be another major issue before Target. Some analysts hold the view that Target could focus on closing some of their weakest stores and re-engineer the rest as part of a revival effort.  However, the arrogant U.S. retailer appeared doomed to retreat back to the United States, as the correspondingly arrogant American military did in the War of 1812.

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