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Target Misses the Mark North of the Border

The run for Target stores in Canada lasted less than two years; the 133 stores actually struggled out of the gate. This leaves 17,600 people out of work and the American owned firm with a $5.4 billion loss. In mid January this year the American retailer put its Canadian assets under bankruptcy protection, ending a short and not-so-sweet attempt at success in the North. In fact, the retailer never really impressed Canadians.

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It isn’t so much that Canadians don’t like Target; we just didn’t like the higher prices. The Central bank pointed to “widespread and persistent competition among retailers” as one factor for low inflation, which soon led analysts to dub this effect of fierce competition as the ‘Target effect’.

Also many products were not shipped north, leaving a noticeable number of empty shelves at Target retail outlets. We are all too familiar with the Target slogan “Expect More, Pay Less” – seems just the opposite was true. Many Canadians are no strangers to cross border shopping; we like the wider selection and why pay more for the same things here, when we can get them cheaper simply by heading south.

Target also failed to offer online shopping in Canada. This move put it at a disadvantage with its rivals. A fluctuating exchange rate between Canada and the US presented its own set of problems. All combined, Target waived the white flag and jumped ship.

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After retreating from Canada, Brian Cornell, Target’s chief executive, announced better than ever prospects south of the border. While Canada’s economy struggles by the plummeting price of crude oil, the American economy is actually gaining strength due to exactly the same trend. That was reason enough for Target to pack its bags and head home.

 

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