Target Canada: the billion dollar mistake

[viper37]

How bad decisions and poor IT killed Target Canada

Very interesting read, imho.

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. 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?
[...]

[The Brain]

ignoring the French-speaking Québécois

[Grey Fox]

No matter the failure, all of them all have the same root cause : Thinking that they had no competition.

[The Brain]

Well their competition doesn't.

[grumbler]

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! 

[HVC]

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.

[Admiral Yi]

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?

[alfred russel]

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.

[HVC]

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.

[Grey Fox]

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! 

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.

[Monoriu]

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. 

[HVC]

All the Asians I see in Costco disagree with your being in bulk theory

[Razgovory]

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?

[Jacob]

Mono, there are plenty of Chinese people who shop at Costco.

[Razgovory]

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.