How bad decisions and poor IT killed Target Canada (http://www.zdnet.com/article/billion-dollar-failures-how-bad-decisions-and-poor-it-killed-target-canada/)
Very interesting read, imho.
Quote
Business school case studies tend to fall into two categories: epic wins and oh-my-gosh-how-could-they-possibly-have-been-so-stupid epic failures. This article discusses a real-world billion dollar story that falls into the second category. As epic failures go, this one is worthy of the history books.
Let's set the scene. Target is one of America's largest and most successful retailers. The 114-year-old company that evolved out of the old Dayton-Hudson company now has more than 1,800 retail locations.
Unfortunately, none of those are in Canada. Anymore. And thus begins our story.
This is a story of hubris, impossible deadlines, and information technology. Yes, as it turns out, if you want to be a worldwide retailer, your information systems are the glue that holds it all together. In Target Canada's case, not so much.
As an American with three Target stores right in our neighborhood, I didn't realize that Target wasn't a worldwide thing. But it's not. Walmart, by contrast, operates something over 11,000 stores in 28 countries. Walmart is a $465 billion company. Target is a $72 billion company, certainly not small potatoes. But Target, it seems, wanted to be more like Walmart.
And so, in 2011, the Target Corporation decided to expand into Canada (http://www.canadianbusiness.com/the-last-days-of-target-canada/). That should have been easy, right? After all, we speak the same language (ignoring the French-speaking Québécois) and most Americans somehow seem think of Canada as our 51st, more polite, colder state to the north.
But it's not that simple. Take two factors as an example. Canada has a different currency. Sure, it uses dollars, but at the time of this writing a Canadian dollar is worth only 72 percent of an American dollar. That conversion rate is constantly fluctuating. Also, Canada uses the metric system. To us in the US, a 2-foot deep shelf is a 2-foot deep shelf. In Canada, that shelf is 60.96 centimeters.
You can already begin to see the IT problem, can't you?
[...]
Quoteignoring the French-speaking Québécois
:angry:
No matter the failure, all of them all have the same root cause : Thinking that they had no competition.
Well their competition doesn't.
Quote from: Grey Fox on February 12, 2016, 04:20:04 PM
No matter the failure, all of them all have the same root cause : Thinking that they had no competition.
I can see why you are not a businessman! :lol:
The logistics and over expansion hurt them, but what killed them was that Canadians expected the same products and prices. Even with a perfect rollout target wouldn't have faired well.
Quote from: HVC on February 12, 2016, 05:41:50 PM
The logistics and over expansion hurt them, but what killed them was that Canadians expected the same products and prices. Even with a perfect rollout target wouldn't have faired well.
Why were the products and prices different? Boneheadedness, or something structural?
They are hardly the first company to try to have a supply chain crossing the US - Canada border. I assume they aren't using their own internally developed software, so whatever consultants (I assume SAP?) they were using should have been able to handle this. This is a wheel that has already been invented.
Not sure of the products, but the prices were a natural occurrence of doing business in Canada. Higher transport costs wages and the like. When target came the exchange was closer to par iirc so target didn't even have that going for them. People expected it because the excitement of target coming north was created by word of mouth from shoppers who went south to buy from target. There was customer expectations that were not met and the blow back was huge.
Quote from: grumbler on February 12, 2016, 05:05:40 PM
Quote from: Grey Fox on February 12, 2016, 04:20:04 PM
No matter the failure, all of them all have the same root cause : Thinking that they had no competition.
I can see why you are not a businessman! :lol:
What's wrong with my statement? They announced 2 years in advance they were coming to Canada. What did you think Walmart & Canadian Tire did for those 2 years?
They were under the impression, their actions show that, that Canadians would flock to them has if they were bringing the knowledge of fire.
Brings back memories. We did went to the Canadian department stores many times when we were there. But my family mostly shopped at the Chinese stores. My parents for example couldn't find a single pair of shoes that fit them - they were far too big. They had to go to the children's section to buy shoes, no joke. The stores were too huge, far too physically demanding to go from entry to exit. They were too far from the city. Chinese like to make frequent shopping trips to buy a small amount of stuff, not a small number of trips to buy lots of stuff. The stores tried to give us lots of "financing" options, but we paid cash. Too much DIY stuff when we paid someone to do that sort of thing. The shelves were huge and we literally had problem reaching them.
All the Asians I see in Costco disagree with your being in bulk theory :P
Quote from: Monoriu on February 12, 2016, 06:25:37 PM
Brings back memories. We did went to the Canadian department stores many times when we were there. But my family mostly shopped at the Chinese stores. My parents for example couldn't find a single pair of shoes that fit them - they were far too big. They had to go to the children's section to buy shoes, no joke. The stores were too huge, far too physically demanding to go from entry to exit. They were too far from the city. Chinese like to make frequent shopping trips to buy a small amount of stuff, not a small number of trips to buy lots of stuff. The stores tried to give us lots of "financing" options, but we paid cash. Too much DIY stuff when we paid someone to do that sort of thing. The shelves were huge and we literally had problem reaching them.
How small were your parents?
Mono, there are plenty of Chinese people who shop at Costco.
From what mono said it sounds like his parents don't buy shoes, they hide during the day and come out at night and make them.
Quote from: Razgovory on February 13, 2016, 01:02:47 AM
From what mono said it sounds like his parents don't buy shoes, they hide during the day and come out at night and make them.
The Gnomes of Hong Kong.
I would say their basic mistake was trying to go "big bang" and do it all at once.
That almost never works when the thing you are trying to do is new to you.
Quote from: Razgovory on February 13, 2016, 01:02:47 AM
From what mono said it sounds like his parents don't buy shoes, they hide during the day and come out at night and make them.
:lol:
Canadians wanted American Target. Target instead delivered Canadian Wal-Mart, which we already had, twice over with both Wal-Mart and Zellers. We already had Zellers, we already had Wal-Mart. We wanted Target but not only did Target not give it to us, they also had all these supply chain issues to boot and poorly stocked shelves in every store greeted us. Target in Canada was a fucking disaster.
Quote from: PRC on February 13, 2016, 01:31:33 AM
Canadians wanted American Target. Target instead delivered Canadian Wal-Mart, which we already had, twice over with both Wal-Mart and Zellers. We already had Zellers, we already had Wal-Mart. We wanted Target but not only did Target not give it to us, they also had all these supply chain issues to boot and poorly stocked shelves in every store greeted us. Target in Canada was a fucking disaster.
Umm... Canadian Target took over Zellers. When Canadian Target opened there was no such thing as Zellers.
No, it was mostly the supply chain issues that sank Canadian Target.
Quote from: Barrister on February 13, 2016, 01:34:04 AM
Umm... Canadian Target took over Zellers. When Canadian Target opened there was no such thing as Zellers.
No, it was mostly the supply chain issues that sank Canadian Target.
Exactly. Canadian Target was Zellers. Same products on the shelves, same store. That was the issue. We didn't need Zellers anymore because Wal-Mart was doing it better. We needed American Target. Did you ever go into an American Target? It's an upscale Wal-Mart. We didn't get American Target... we got Zellers.
Quote from: Grey Fox on February 12, 2016, 06:20:23 PM
Quote from: grumbler on February 12, 2016, 05:05:40 PM
Quote from: Grey Fox on February 12, 2016, 04:20:04 PM
No matter the failure, all of them all have the same root cause : Thinking that they had no competition.
I can see why you are not a businessman! :lol:
What's wrong with my statement? They announced 2 years in advance they were coming to Canada. What did you think Walmart & Canadian Tire did for those 2 years?
They were under the impression, their actions show that, that Canadians would flock to them has if they were bringing the knowledge of fire.
I think that they knew they had competition. Your assertion that they thought "they had no competition", when they clearly had competition and had to have known it (as every business assumes that they have competition) shows that you know noting whatever about business. If you had ever been a businessman and believed that businesses can think they have no competition, you surely are no businessman now. Your statement is absurd.
Quote from: Monoriu on February 12, 2016, 06:25:37 PM
Brings back memories. We did went to the Canadian department stores many times when we were there. But my family mostly shopped at the Chinese stores. My parents for example couldn't find a single pair of shoes that fit them - they were far too big. They had to go to the children's section to buy shoes, no joke. The stores were too huge, far too physically demanding to go from entry to exit. They were too far from the city. Chinese like to make frequent shopping trips to buy a small amount of stuff, not a small number of trips to buy lots of stuff. The stores tried to give us lots of "financing" options, but we paid cash. Too much DIY stuff when we paid someone to do that sort of thing. The shelves were huge and we literally had problem reaching them.
I can understand that shopping mentality. When I was living in England, they had the same mentality. One didn't need a refrigerator because one bought one's food for each meal fresh from the shops.
If you go to a traditional Chinese wet market, and there are still plenty of those in Hong Kong, they still slaughter live chicken there. You point your finger at a chicken, and they chop off its head right in front of you. Then you take the corpse back home, without any ice. Why? Because you are expected to have it for dinner on the same day. No need to chill it. Chinese believe that food must be fresh, and by fresh, they mean the food must not be frozen or chilled in any way.
So they have to go to the market every day. That's what my mother did. Whenever there is bad weather forecast, say a typhoon will hit the city in a few days, people have to rush to the markets to stock up, because there is hardly any food at home.
Quote from: Jacob on February 13, 2016, 12:55:27 AM
Mono, there are plenty of Chinese people who shop at Costco.
You know what, if I were to live in Canada again, *I* will shop at Costco and Walmart.
But my wife won't :lol:
Quote from: PRC on February 13, 2016, 01:37:45 AM
Exactly. Canadian Target was Zellers. Same products on the shelves, same store. That was the issue. We didn't need Zellers anymore because Wal-Mart was doing it better. We needed American Target. Did you ever go into an American Target? It's an upscale Wal-Mart. We didn't get American Target... we got Zellers.
this here makes it sound like you think they pitched their inventory too down-market.
Quote from: Monoriu on February 13, 2016, 02:26:08 AM
If you go to a traditional Chinese wet market, and there are still plenty of those in Hong Kong, they still slaughter live chicken there. You point your finger at a chicken, and they chop off its head right in front of you. Then you take the corpse back home, without any ice. Why? Because you are expected to have it for dinner on the same day. No need to chill it. Chinese believe that food must be fresh, and by fresh, they mean the food must not be frozen or chilled in any way.
So they have to go to the market every day. That's what my mother did. Whenever there is bad weather forecast, say a typhoon will hit the city in a few days, people have to rush to the markets to stock up, because there is hardly any food at home.
Seems odd China would have this culture considering the history of famines.
Quote from: Berkut on February 13, 2016, 01:11:34 AM
I would say their basic mistake was trying to go "big bang" and do it all at once.
That almost never works when the thing you are trying to do is new to you.
Absolutely. I do some work on the side for a business school and the subject came out the other day; they all thought it was just crazy to go large scale in a new market you don't have experience in, particularly without local partners. Open a few in big cities, see how it works, get your know-how and logistics in order, go from there.
Quote from: Admiral Yi on February 13, 2016, 02:44:02 AM
Quote from: PRC on February 13, 2016, 01:37:45 AM
Exactly. Canadian Target was Zellers. Same products on the shelves, same store. That was the issue. We didn't need Zellers anymore because Wal-Mart was doing it better. We needed American Target. Did you ever go into an American Target? It's an upscale Wal-Mart. We didn't get American Target... we got Zellers.
this here makes it sound like you think they pitched their inventory too down-market.
It's different in Canada because Wal-Mart positions itself a little more up-market than it's US version.
Target sucks. It's Wal-mart for people who think they aren't poors, and they pass the expense on to you.
However, I've been forced into shopping at Target often, instead of Wal-mart (I mean, both are evil, but Wal-mart is cheaper) due to its proximity and the monstrous nature of urban traffic.
Quote from: Ideologue on February 13, 2016, 08:33:35 AM
Target sucks. It's Wal-mart for people who think they aren't poors, and they pass the expense on to you.
However, I've been forced into shopping at Target often, instead of Wal-mart (I mean, both are evil, but Wal-mart is cheaper) due to its proximity and the monstrous nature of urban traffic.
Don't get it twisted, Target is much nicer. It's like 'you want some basic middle-class home goods, we got you covered*. Whereas going to Walmart is like 'if you walk quietly and don't speak, perhaps the natives won't notice you.'
*and you even get to see them before you buy, I'm calling you out Argos. <_<
I deeply regret not going to a Walmart when I had the chance.
Quote from: viper37 on February 12, 2016, 01:40:31 PM
How bad decisions and poor IT killed Target Canada (http://www.zdnet.com/article/billion-dollar-failures-how-bad-decisions-and-poor-it-killed-target-canada/)
Very interesting read, imho.
Quote
Business school case studies tend to fall into two categories: epic wins and oh-my-gosh-how-could-they-possibly-have-been-so-stupid epic failures. This article discusses a real-world billion dollar story that falls into the second category. As epic failures go, this one is worthy of the history books.
Let's set the scene. Target is one of America's largest and most successful retailers. The 114-year-old company that evolved out of the old Dayton-Hudson company now has more than 1,800 retail locations.
Unfortunately, none of those are in Canada. Anymore. And thus begins our story.
This is a story of hubris, impossible deadlines, and information technology. Yes, as it turns out, if you want to be a worldwide retailer, your information systems are the glue that holds it all together. In Target Canada's case, not so much.
As an American with three Target stores right in our neighborhood, I didn't realize that Target wasn't a worldwide thing. But it's not. Walmart, by contrast, operates something over 11,000 stores in 28 countries. Walmart is a $465 billion company. Target is a $72 billion company, certainly not small potatoes. But Target, it seems, wanted to be more like Walmart.
And so, in 2011, the Target Corporation decided to expand into Canada (http://www.canadianbusiness.com/the-last-days-of-target-canada/). That should have been easy, right? After all, we speak the same language (ignoring the French-speaking Québécois) and most Americans somehow seem think of Canada as our 51st, more polite, colder state to the north.
But it's not that simple. Take two factors as an example. Canada has a different currency. Sure, it uses dollars, but at the time of this writing a Canadian dollar is worth only 72 percent of an American dollar. That conversion rate is constantly fluctuating. Also, Canada uses the metric system. To us in the US, a 2-foot deep shelf is a 2-foot deep shelf. In Canada, that shelf is 60.96 centimeters.
You can already begin to see the IT problem, can't you?
[...]
That reads as one spectacular major failure to me. Target Canada should never have been the same business unit as Target USA. Maybe it's because I spend my time neck-deep in systems analysis these days, but there are obvious differences that were so major that Target Canada should never have tried to use the same processes as Target USA in the first place. They should have pulled a Google, rolled out a new holding company, say, "Target Ventures Holdings" or something super-creative like that, and had both TC and TUSA as separate businesses reporting to that parent.
I mean, c'mon. Metric vs. Imperial, US dollar vs. Canadian dollar, Canadian tax laws vs. US tax laws... my systems analysis professor would argue that those are clearly so different that trying to use US processes for a Canadian business is bordering on criminal negligence.
Quote from: Ideologue on February 13, 2016, 08:33:35 AM
Target sucks. It's Wal-mart for people who think they aren't poors, and they pass the expense on to you.
However, I've been forced into shopping at Target often, instead of Wal-mart (I mean, both are evil, but Wal-mart is cheaper) due to its proximity and the monstrous nature of urban traffic.
Maybe it's just our local market (and the fact that they're right across the street from each other), but I find for certain select things, Target actually comes out cheaper than Walmart. Also, I'm willing to pay a bit of a convenience fee to shop at a store that doesn't make me feel like I had to check my soul at the door.
walmart grocery shopping is fantastic
Quote from: Admiral Yi on February 13, 2016, 02:44:02 AM
this here makes it sound like you think they pitched their inventory too down-market.
The inventory they were pitching was already in the market.
Quote from: LaCroix on February 13, 2016, 01:48:42 PM
walmart grocery shopping is fantastic
Except for the lines.
Quote from: Peter Wiggin on February 13, 2016, 04:11:41 PMExcept for the lines.
never really had this problem :Canuck:
Quote from: garbon on February 13, 2016, 09:14:16 AM
Quote from: Ideologue on February 13, 2016, 08:33:35 AM
Target sucks. It's Wal-mart for people who think they aren't poors, and they pass the expense on to you.
However, I've been forced into shopping at Target often, instead of Wal-mart (I mean, both are evil, but Wal-mart is cheaper) due to its proximity and the monstrous nature of urban traffic.
Don't get it twisted, Target is much nicer. It's like 'you want some basic middle-class home goods, we got you covered*. Whereas going to Walmart is like 'if you walk quietly and don't speak, perhaps the natives won't notice you.'
*and you even get to see them before you buy, I'm calling you out Argos. <_<
In certain respects, yeah, Target is better. (Their clothes tend to be a cut above, to be sure, but I don't care very much about clothes for a lot of reasons* and do my best to avoid buying them.)
*Can't afford truly nice things, don't like supporting globalization in general and the use international slave labor, and of course, that old chestnut, what's on the inside counts more--that is, the body underneath the clothes counts more, not some dumb hippie sentiment.
I did buy a vacuum from Target yesterday. Sometimes their blu-rays are well-priced.
The grocery stuff people mentioned is 100% accurate, though. Wal-mart is better, price-wise, than most dedicated grocers.
Quote from: Ideologue on February 14, 2016, 07:53:19 AM
In certain respects, yeah, Target is better. (Their clothes tend to be a cut above, to be sure, but I don't care very much about clothes for a lot of reasons* and do my best to avoid buying them.)
Oh, I wouldn't really suggest clothes from either. Near same price range, you'd be better off at Kohl's.
Not sure what I think about how you avoid buying clothes in general.
Quote from: Ideologue on February 14, 2016, 07:53:19 AM*Can't afford truly nice things, don't like supporting globalization in general and the use international slave labor, and of course, that old chestnut, what's on the inside counts more--that is, the body underneath the clothes counts more, not some dumb hippie sentiment.
You big making shit then? :D Presumably locally made clothes are more expensive unless home-made.
Also, while a nice sentiment about value of body/person vs. clothes, you show up looking like a scrub and people will treat you as such.
Quote from: Ideologue on February 14, 2016, 07:53:19 AM
The grocery stuff people mentioned is 100% accurate, though. Wal-mart is better, price-wise, than most dedicated grocers.
I wonder though if that's because there are a lot of crap grocers and there is a lot of difference in quality when things are full of sugars, preservatives and dyes.
I wouldn't shop Walmart for produce, meat, fresh dairy, or baked goods, but their dry goods, canned goods, and frozen foods are decent for a decent price. I only buy foot there maybe twice a year, though, 'cause hassle (not so much lines, but the size of the parking lot and the store itself).
I tried Target, but the way they constantly move merchandise around the store to make you hunt for what you want turned me off. I have better uses of my time than spending it shopping at a place that deliberately makes shopping hard.
Quote from: grumbler on February 14, 2016, 02:59:41 PM
I tried Target, but the way they constantly move merchandise around the store to make you hunt for what you want turned me off. I have better uses of my time than spending it shopping at a place that deliberately makes shopping hard.
Oh yeah, that pissed me off royally too. It's one of those "force customers to wander around the shop so they might buy things they otherwise wouldn't" tactics.
Quote from: Monoriu on February 13, 2016, 02:35:05 AM
Quote from: Jacob on February 13, 2016, 12:55:27 AM
Mono, there are plenty of Chinese people who shop at Costco.
You know what, if I were to live in Canada again, *I* will shop at Costco and Walmart.
But my wife won't :lol:
with our taxes and the price of real estate in Vancouver? That's the only thing you'll be able to afford ;)
Quote from: viper37 on February 14, 2016, 05:29:16 PM
Quote from: Monoriu on February 13, 2016, 02:35:05 AM
Quote from: Jacob on February 13, 2016, 12:55:27 AM
Mono, there are plenty of Chinese people who shop at Costco.
You know what, if I were to live in Canada again, *I* will shop at Costco and Walmart.
But my wife won't :lol:
with our taxes and the price of real estate in Vancouver? That's the only thing you'll be able to afford ;)
If you earn the median salary in Hong Kong, you need 20 years of not spending anything, not even on food and rent, to save up a downpayment. That's assuming that housing prices do not go up anymore.
What I am trying to say is, Vancouver real estate is cheap :P
From a shopper's perspective, it was definitely supply chain issues that destroyed them. It was like the old saying, 'you never get a second chance to make a first impression'. People were very excited to try the new Target stores - but when they went, they found shelves often bare of merchandise, and what was there was not organized in any coherent manner; they mostly went "well, this sucks" and did not come back.
Quote from: Malthus on February 15, 2016, 10:17:20 AM
From a shopper's perspective, it was definitely supply chain issues that destroyed them. It was like the old saying, 'you never get a second chance to make a first impression'. People were very excited to try the new Target stores - but when they went, they found shelves often bare of merchandise, and what was there was not organized in any coherent manner; they mostly went "well, this sucks" and did not come back.
Yeah, you kept hearing how Target was this amazing experience - or, once people got over their hype, that it was like Walmart only nicer and with branding that made it okay to shop there even if you looked down on "Walmart people". They spent a lot of time advertising how great it was going to be too. I mean, I'm not really a big-box-retail shopping kind of guy but I was still looking forward to Target opening from all the damn advertising building up expectations.
But they rather failed to deliver on the hype.
Target ususally has nicer jailbait. Especially in the summer.
If I ever go to the US again, I will make going to a Target/Walmart a priority.
Quote from: Monoriu on February 15, 2016, 09:01:23 PM
If I ever go to the US again, I will make going to a Target/Walmart a priority.
why?
Quote from: Admiral Yi on February 15, 2016, 09:01:50 PM
Quote from: Monoriu on February 15, 2016, 09:01:23 PM
If I ever go to the US again, I will make going to a Target/Walmart a priority.
why?
Because I have never been to one before. They are so famous and so well-known. I've actually considered buying Walmart stock and I'd like to see what I am buying.
Quote from: DontSayBanana on February 13, 2016, 10:17:32 AM
That reads as one spectacular major failure to me. Target Canada should never have been the same business unit as Target USA. Maybe it's because I spend my time neck-deep in systems analysis these days, but there are obvious differences that were so major that Target Canada should never have tried to use the same processes as Target USA in the first place. They should have pulled a Google, rolled out a new holding company, say, "Target Ventures Holdings" or something super-creative like that, and had both TC and TUSA as separate businesses reporting to that parent.
I mean, c'mon. Metric vs. Imperial, US dollar vs. Canadian dollar, Canadian tax laws vs. US tax laws... my systems analysis professor would argue that those are clearly so different that trying to use US processes for a Canadian business is bordering on criminal negligence.
:yes: The first time I heard that Target was expanding to Canada, it was immediately obvious to me that this venture was a total disaster.
Quote from: DGuller on February 15, 2016, 09:17:22 PM
:yes: The first time I heard that Target was expanding to Canada, it was immediately obvious to me that this venture was a total disaster.
And after he invested his life savings into it, it became even more clear.