The Nature Of The Problem Target Company Faced In Canada Case Study Examples

Type of paper: Case Study

Topic: Company, Customers, Canada, Business, Target, United States, America, Products

Pages: 9

Words: 2475

Published: 2021/01/09

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International Business

Abstract
This paper presents the problem that Target Company Faced in Canada. Target Company Canada is a subsidiary of the Target Corporation that is based in USA. The company operates in the industry of department store, and it is being liquidated currently. Many Canadians loved shopping at Target whenever they visited USA and before the Company launched its operations in Canada. The prices in the company's Canadian stores were higher than those in the American stores. Most of the consumers in Canada were used to shop in different rates, and the company did not convince the Canadian customers to visit their stores on a regular basis. The Company reported huge losses after operating for Canada for approximately one year.The cyber attack breached data privacy and approximately 40 million credit cards, and approximately 70 million accounts were compromised by the data breach. Most of the Canadians on the borderline found it cheaper to shop online or to visit the company's store in USA instead of shopping in the stores based in Canada. The Company had supply chain issues, and this discouraged many shoppers who had high expectations for it. Most of the Canadians were familiar with the company because they had visited and shopped there before it had moved into the USA. The Wal-Mart Company posed stiff competition to the Target Company in Canada by lowering their prices, increasing their offerings and increasing the number of stores in the country. The Target Company should develop its products in a way that is distinct from those of competitors. The company should develop the Canadian market after conducting a thorough market research. The market research should focus on the political, social, legal, economic, environmental and technological factors that influence the Buying habits of the Canadians. The company should implement specific, realistic, measurable and time-bound marketing objectives and goals. The company's product strategy should focus on the Canadian consumers' beliefs, attitudes, consumption patterns, incomes, and preferences. The prices should not be higher than those of the company's stores in the US and those of competitors. The company should emphasize and publicize the concept of One-stop shopping by placing various products under one roof. The Company should uphold CSR by conserving the environment and packing the customers' shopping in recyclable and environmentally friendly materials. The company should invest in the design of the stores, and the graphics advertize the company's products. The promotional strategy should include the internet, advertising, and print media.

Introduction

This paper presents the problem that the Target Company Faced in Canada. Target Company Canada is a subsidiary of the Target Corporation that is based in USA. The company operates in the industry of department store, and it is being liquidated currently. The company was formed on 5th March 2013, and it is based in Ontario, Canada. Its headquarters are in Mississauga, Canada, and it has a total of 133 locations. Aaron Alt is the CEO, and the total number of workers is 17600 as at 2015.Target's slogan is Pay less, Get More, and Target loves Canada. Many Canadians loved shopping at Target whenever they visited USA and before the Company launched its operations in Canada. However, when the Company opened up stores in Canada, it did not succeed. The data breach in USA made the company miss the benefits of its massive roll out in Canada. The company had issues with its inventory, and most of the store shelves were empty (Target Corportaion, 2011). The prices in the company's Canadian stores were higher than those in the American stores. The Canadians had not adopted the one-stop shopping culture, and this was a big blow to the company. Most of the consumers in Canada were used to shop in different rates, and the company did not convince the Canadian customers to visit their stores on a regular basis. The Company reported huge losses after operating for Canada for approximately one year (Target Pressroom, 2011). The nature of the problem Target Company Faced in Canada is in the first part. Steps the Company implemented to solve the problem are in the second section. Recommendations how the matter could be solved are in the fourth part. A conclusion is provided in the last part of the paper.

Target Company has been making good a corporate decision since it was incorporated in 1962.The Company has adopted a business model that centers on the provision of low-cost goods and recently it opened124 stores in Canada. The Company’s decision to get into the Canadian market occurred after it had agreed to buy leasehold interest worth $ 1.8 billion from the Zellers who have been retailers in Canada. Through the leaseholds, the company got approximately 220 locations in Canada (Target Pressroom, 2011).
Many Canadians loved shopping at Target whenever they visited USA and before the Company launched its operations in Canada. However, when the Company opened up stores in Canada, the magic of customer loyalty that they had experienced in USA vanished. The Company was disappointed when it could not utilize the customer information it had learned from the USA, and this has been the major reason for its failure in Canada. The Company reported huge losses after operating for Canada for approximately one year. The data breach in USA made the company miss the benefits of its massive roll out in Canada. The company’s decision to open very many stores that are 124 in a new market within a short duration was not a wise move because it did not understand the Canadian market fully (Frank, 2013).
The company had issues with its inventory, and most of the store shelves were empty. Accordingly, those stylish and exclusive brands that the company sells in the USA were not present in the Canadian stores. Additionally, the prices in the company’s Canadian stores were higher than those in the American stores. The customers did not see the stuff and merchandise that they were used to see in The Company’s USA stores. The Canadians had not adopted the one-stop shopping culture, and this was a big blow to the company. Target’s initial sales in Canada were too low compared to what the management had anticipated. In USA, the culture of one-stop shopping is popular but most of the Canadian have not embraced it. Most of the consumers in Canada were used to shop in different rates, and the company did not convince the Canadian customers to visit their stores on a regular basis (Tencer, 2013).
The Locations of the Company’s stores in Canada were not ideal. The company bought the 120 store from Zellers retailer, and most of the stores had been running as rundown shopping centers whose accessibility to the customers was limited. The locations of the stores were small and could not compare to the stores in the USA. The Stores required a lot of money but in the end the investment did not pay off and they did not change the company’s trademark in USA to a walk over in the Canadian market (The Canadian Press, 2011) .Many Canadian customers felt that the prices that Target charged in Canada were higher than those it charged in USA. Most of the Canadians on the borderline found it cheaper to shop online or to visit the company’s store in USA instead of shopping in the stores based in Canada.
The Company had supply chain issues, and this discouraged many shoppers who had high expectations for it. Most of the shelves in the company’s stores were empty because the company had difficulty setting up the appropriate mix of inventory in its stores. The company’s stores in Canada had limited sections and most of the shelves were empty and were not organized properly. For example in some stores the customers could only find one category of detergent that is the tide detergent and the there were no other types to fill the shelves. Therefore, the company ended up having too much of particular products and very little of other products. Canadians were disappointed by the empty shelves and the inadequate variety for selection (Flavelle, 2012).
Most of the Canadians were familiar with the company because they had visited and shopped there before it had moved into the USA. Despite the fact that they the company had an advantage because of the brand awareness among the Canadians, most of the consumers felt that the prices were high and there were products that were missing which could be found in the USA stores. The company was forced to adopt the low process and to introduce new products in its stores (CBC News, 2013).
The Wal-Mart Company posed stiff competition to the Target Company in Canada. The Wal-Mart had a competitive advantage because it had opened up stalls in the country for twenty years ago thus it had many loyal customers. By the time the Target Company set up stores in Canada, Wal-Mart was a household name for many customers. The Wal-Mart stores competed against the Target Company by lowering their prices, increasing their offerings and high number of stores in the country. Other competitors such as Loblaw Cos and Shoppers Drug Mart Corporation increased their offerings in clothing and groceries, and this was so difficult for the Target Company.
The Company spent almost the same amount as it took from the Canadian stores after operating in Canada for one year. In 2013, the total sales in Canada were $ 1.3 billion and the operating loss of $ 941 million offset the losses. The gross profit margin was 15%, and this is half the gross profit earned from the USA stores. The company failed to sell the forecasted amount of basics because it did not make turnarounds in the drugs and food departments. The Data Breach of customers that affect the company’s discount RED card customers in 2012 contributed to the company’s bad financial performance. The sales were more than what the company had forecasted despite the fact that the profits plunged by 46%.The data breach veered the focus away from the challenges away from the border. The cyber attack breached data privacy and approximately 40 million credit cards, and approximately 70 million accounts were compromised by the data breach (Strauss, 2013).The company’s entry into the Canadian market was highly ambitious because they set up 124 stores within the first year even before conducting adequate market research. Additionally, the Target Company lacked online presence. Despite that fact that Canadian shoppers were slow to adopting the e-commerce trends, most of Target’s competitors such as Amazon and Wal-Mart had expanded their online offerings in Canada (Canada Newswire, 2013).
The Target company did not conduct adequate market research to aid it comprehend the Canadian consumers and when it realized its failure it as already late thus there is nothing that could have been done to rectify the impression of disappointment that they had created in the Canadian consumers. The company opened too fast and very quickly thus it did not take sufficient time to comprehend the Canadian temperature. The company failed to mimic the USA stores that had performed well but instead it changed the game in Canada by making the stores look Canadian. Accordingly, the company underestimated the potential of the Canadian consumers. The company did not understand that the Canadians had spent their lives shopping across the border and that the Canadians were informed about the Dollar and the differences in prices between USA and Canada. The company did not realize that Canadians were very smart when it came to cross-border shopping (Canada Newswire, 2013).
Even after setting up stores in Canada, the company anticipated that most consumers would still shop in the Company’s stores located in the USA. The company would not set up prices similar to those in the USA stores because of the high transportation, distribution and fuel costs. Additionally the company faced a challenge in Canada because of the wage rates, tax rates, duties and cost of goods that were relatively higher than in the USA. The scales that the company had in Canada were very different from the USA because the Marker place in USA was more densely populated than in the USA (Target Canada, 2013). The company experienced complexities due to the Canadian legal requirements. The company’s distribution network could not service all its locations within Canada additionally; the stores lacked the authority to order for their stock of goods. Accordingly the Windsor and Ontario stores were used to stock Toronto Blue Jays and Toronto Maple Leafs instead of the Detroit Tigers and Detroit Red Wings that were popular among the Canadians.Accordingly, the demand and supply chain issues caused under stocking in some locations and empty shelves in other locations (Canada Newswire, 2013).
The company’s penetration into Canada intended to capitalize on the Customers who crossed the border to shop in its stores located in USA. The penetration backfired because the Canadians felt that the Company did not meet the standards that had been set by the USA stores. The company had a good opening in Canada but, the results that followed were disappointing, and they dragged the Parent’s Company’s results down. Initially, the traffic in the Company’s stores was high but customers did not come back frequently to purchase the basic household goods because the market was flooded with drug stores such as Wal-Mart Canada, Loblaw and Shoppers Drug Mart and Canadian Grocery (Strauss, 2013) . The company intended that the Canadian Shoppers could do one-stop shopping, but it failed because the Canadians are used to shopping their products aiming various retailers. Despite the fact that the Target Company’s stores improved the untidiness of their predecessors, Zellers Stores, some customers claimed that they deals that had been offered by the Zellers were much better (CBC News, 2013).

Steps the Company implemented to solve the problem

Regarding the issue of customer loyalty the company introduced measures to attract the consumers who loved shopping in its USA stores. The company decided to focus on the customer information it had obtained from USA to target and attract the Canadian Customers. The company hired a new CEO to prevent a repetition of the data breach that was experienced in the country. Since The Company's decision to open very many stores that is 124 in a new market within a short duration was not a wise move it decided to liquidate and close all its stores in the country (Flavelle, 2012).
The company introduced measures to solve its inventory issues by refilling the store shelves. The company has been trying to lower its prices in a bid to lure the Canadian customers. Target tried to introduce the stylish and exclusive brands that the company sells in the USA. The company has introduced new goods in addition to the stuff and merchandise that the Canadians were used to see in the Company’s USA stores. The company has introduced the concept of One-stop shopping by placing various products under one roof. The company has tried to convince the Canadian customers to visit their stores on a regular basis by introducing the concept of one-stop shopping (The Canadian Press, 2011).
Target has been diversifying its products in a bid to counter the strong competition in the department stores industry from strong market players such as Wal-Mart and Kmart. The company offers upscale and trend-forward goods at a cost that are low than those of competitors. The company sells high-quality goods at margins that are low because it aim sat reducing expenses. The company’s differentiation strategy has help in attracting customers who are younger than those of Wal-Mart. The median age of Target's customers is 41 years.The Company has deals with the perception that its goods are more expensive than those of consumers by including perishables in their stock, reducing discretionary goods and spending three-quarters of the marketing budget on advertising the values of its products. Additionally, the company has reduced the number of stores it opens in a year from 100 to 70 stores (The Canadian Press, 2011). The company’s stores are attractive because of the drop ceilings, wide aisles, attractive organization of merchandise and clean fixtures. The company designs its stores, well, and the graphics advertize the company's products. Additionally, contemporary signage is used to dress the shelves (Tencer, 2013).
The company improved the idealiness of its locations. The locations were furnished, and the improvement increased the accessibility of the stores to the customers. The company has improved the sizes of the stores with the aim of making them similar to the USA stores. The Company has tried to solve its supply chain issues with the aim of promoting its reputation in discouraged many shoppers who had high expectations for it (Frank, 2013). The company fills it shelves with a variety of goods and the organization of the Canada on the shelves has been improved. The company has dealt with the under stocking and overstocking issues by establishing reorder levels for various commodities. The company has adopted the low process and to introduce new products in its stores (Target Pressroom, 2011).
The company offered the REDcard to its customers in the form of Debit and Credit cards before its opening in Canada.The REDcard guaranteed customers a discount of 5% on all purchases and allowed customers to withdraw up to $40. The REDcard version in Canada did not facilitate online shopping and a 30-day warranty (Target Pressroom, 2011).
The company filed for Bankruptcy in Mid January 2015 and this meant that it intended to close down all its stores in Canada the was cancellation of two stores that were to be opened in South Core and Bayshore Shopping Centre. The subsidiary forecasted that it could start generating profits in 2012 thus; it could not meet the requirements for the workers’ payroll if it could not file for bankruptcy and obtain protection from creditors. The liquidation of the company commenced after the filing of the bankruptcy. The closure of stores commenced on 18th March 2015 and 156 stores were closed down in the first week. As at 5th April 2015, 96 stores will be closed.
The Parent Company decided to abandon its $ 4.4 billion investment in Canada. Target decided to pull out of the Canada after making approximately $ 2 billion loss for two fiscal years. Even after a new CEO (Chief Executive Officer) was hired, the Company did not experience any turnaround in its operations.The company’s CEO, Cornell Brain, explained that the company’s stores were closed because the company could be profitable in Canada only after 2012.The market exit stopped the company's continued losses in Canada, and it help it to lay more focus on its activities in the USA market. The company decided to focus on small stores in urban areas, chic merchandising and mobile and online shopping within the USA market (Target Pressroom, 2011).

Recommendations how the matter could be solved

Market Penetration
The Target Company should adopt the market penetration strategy by striving to increase sales of all the products by penetrating into the Canadian market deeper and investing heavily in the promotional and marketing activities. The company should take advantage of the market penetration strategy by selling all the products that the Canadian customers are used to seeing in the USA stores. The company should increase the extensiveness of its distribution channels to avoid under stocking of some commodities in the stores. The company should encourage the Canadian customers by introducing loyalty programs and encouraging them to increase the usage of their products

Product Development

The Target Company should develop its products in a way that is distinct from those of competitors. The products that are sold in the Canadian store should be of the same standards as those that are sold in the USA stores. The company should modify its products to make them attractive to the Canadians. The performance and outlook of the goods sold in the Canadian market should be the same as that of the goods that the Canadians have been purchasing in the USA stores. The company should introduce the stylish and exclusive brands that the company sells in the USA. The company should introduced new goods in addition to the stuff and merchandise that the Canadians were used to see in the Company’s USA stores.

Market Development

The company should develop the Canadian market after conducting a thorough market research. The market research should focus on the political, social, legal, economic, environmental and technological factors that influence the Buying habits of the Canadians. players.

Diversification

The company should diversify its products to make them different from those of competitors. The diversification activities will increase the company’s potential to earn high-profit margins. Before diversifying its products, the company should carry out research on the tastes and preferences of the Canadian consumers than the products will be diversified to meet the tastes and preferences. The goods that are sold in the Canadian stores should be diversified to offer s a wide variety from which the consumers can to choose.

Market Segmentation

The company should segment all it customers appropriately then introduce the products that meet the needs of all customers. The demographics that the company should consider when segmenting its customers include social classes, education geographical location, tastes and preferences, cultural beliefs, gender, income, and age. The company should sell inventory that is required by al customers throughout Canada.

Market Targeting

The company should target all the Canadian customers well because moats of them are already used to its products.There should be discounts and loyalty programs for the Canadian customers. The Targeting strategy of the company should ensure the preferences of the individual shoppers are met adequately. The company should target all customers to increase the sales of all the commodities.

Market Positioning

Target Company should be positioned well in the Canadian market and implementation of the shorter, and long-term marketing objectives will improve the company’s position in the departmental stores industry. The company should set up stores in locations that can be easily accessed by the Canadian customers. Once the company set up accessible stores, it will be well positioned, and it will compete favorably against rivals such as Wal-Mart.

Marketing Objectives and Goals

The company should implement specific, unambitious, realistic, measurable and time-bound marketing objectives and goals. The company should focus on improving marketing efficiency and sales within Canada. The market objectives should focus on transforming the losses to revenues. The company should work hard to capture a significant portion of the Canadian market just like in the USA. The company should work hard to restore 100% confidence in consumers because most of them are discouraged with its products.

Product Strategy

Target Company should improve the image and reputation of its products in the Canadian consumers. The product should be of high quality, and the consumers should enjoy maximum utility for using the company's products. The Target Company should diversify its products to counter the strong competition in the department stores industry from strong market players .The company should offer upscale and trend-forward goods at a cost that are low than those of competitors. The company’s packaging materials should be eco-friendly and should be recyclable to help in conserve the environment of the consumers in Canada. The company’s products should gain trust and credibility from the Canadian customers because of their quality. The company’s product strategy should focus on the Canadian consumers’ beliefs, attitudes, consumption patterns, incomes, and preferences.

Pricing Strategy

The company should offer low-cost products to the Canadian consumers. The prices should not be higher than those of the company’s stores in the US and those of competitors. The pricing should be competitive to increase the company’s goodwill in the Canadian Market. The competitive pieces will be instrumental towards increasing the company’s market share and growth in the Canadian market. The company should sell high-quality goods at margins that are low to reducing expenses.

Promotion Strategy

The company should adopt aggressive promotional strategies to market its locations and products. The promotional strategies will increase awareness concerning the company’s presence in Canada. The promotional strategy should include the internet, advertising, and print media. Additionally it should use social media such as YouTube, Instagram, Yahoo, Twitter and Facebook to increase its contact with the Canadian customers. The company should launch a website that will serve the Canadian customers and it should introduce the concept of online shopping to increase the level of sales in the Canadian market. The company should adopt the publicity strategy to increase customer loyalty so that it can be like in the USA stores. The company should offer smart cards to all consumers, and the loyalty cards should be used to accumulate loyalty points that will be redeemable.

Place Strategy

The company should open stores in areas that are accessible to all clients. The stores should be located along the roads to increase their accessibility. The place strategy will mitigate the negative impact of the poor locations for the company’s initial stores. Additionally, the company should offer parking lots to the customers as part of the place strategy. The company should solve supply issues by refilling the store shelves. The company should emphasize and publicize the concept of One-stop shopping by placing various products under one roof. The company should convince the Canadian customers to visit their stores on a regular basis by introducing the concept of one-stop shopping.

Processes

The company should focus on efficient customer service by ensuring all the customers’ shopping needs are meets. The company’s employees should be trained on how to handle customers with etiquette.The Company should uphold CSR (Corporate Social Responsibility) by conserving the environment and packing the customers’ shopping in recyclable and environmentally friendly materials. The company’s activities should uphold environmental sustainability. The company should with the perception that its goods are more expensive by reducing discretionary goods. The company should reduce the number of stores it opens in a year from 70 to 50 stores. The company should avoid under stocking and overstocking issues by establishing reorder levels for various commodities.

Physical Location

The company should set up stores in locations that will attract many customers. The place strategy will help the company to increase the number of profitable stores throughout Canada. The setting up of locations that are attractive will stimulate sales and ensure that all customers can access the company’s stores within Canada. The physical location strategy will help the company to attract those customers who go all the way to USA. The company should consider increasing the number of stores along the border to cater for the customers who like shopping in North America. The company's stores are attractive because of the drop ceilings, wide aisles, attractive organization of merchandise and clean fixtures. The company should use graphics to advertising its products. The company should improve the idealiness of its locations, and the locations should be furnished their accessibility to the customers. Additionally, the company should improve the sizes of the stores.

People

The company should hire workers who are competent and friendly. The workers should be prepared on how to deal with the Canadian customers, and they should be paid well to encourage and motivate them. The company should foster positive relationships with the Canadian customers by selling them goods of high quality and treating them well. The Company should implement measures prevent a repetition of the data breach that was experienced in the country.

Conclusion

In conclusion, this paper has presented the nature of the problem Target Company Faced in Canada .The Data Breach of customers that affect the company's discount RED card customers in 2012 contributed to the company's bad financial performance. The cyber attack breached data privacy and approximately 40 million credit cards, and approximately 70 million accounts were compromised by the data breach. The Locations of the Company's stores in Canada were not ideal because the company bought the 120 store from Zellers retailer and their accessibility to the customers was limited. Most of the Canadians on the borderline found it cheaper to shop online or to visit the company's store in USA instead of shopping in the stores based in Canada. The Target company did not conduct adequate market research to aid it comprehend the Canadian consumers, and it opened too fast and very quickly thus it did not take sufficient time to comprehend the Canadian temperature. The company faced a challenge in Canada because of the wage rates, tax rates, duties and cost of goods that were relatively higher than in the USA. The expansion into Canada backfired because the Canadians felt that the Company did not meet the standards that had been set by the USA stores. The Company had supply chain issues, and this discouraged many shoppers who had high expectations for it. Most of the Canadians were familiar with the company because they had visited and shopped there before it had moved into the USA. The Wal-Mart Company posed stiff competition to the Target Company in Canada by lowering their prices, increasing their offerings and increasing the number of stores in the country. The Target Company should adopt the market penetration strategy by striving to increase sales of all the products by penetrating into the Canadian market deeper and investing heavily in the promotional and marketing activities. The Target Company should develop its products in a way that is distinct from those of competitors. The company should target all the Canadian customers well because moats of them are already used to its products.The company should develop the Canadian market after conducting a thorough market research. The market research should focus on the political, social, legal, economic, environmental and technological factors that influence the Buying habits of the Canadians. Target Company should be positioned well in the Canadian market and implementation of the shorter, and long-term marketing objectives will improve the company's position in the departmental stores industry. The company should segment all it customers appropriately then introduce the products that meet the needs of all customers. The company should implement specific, realistic, measurable and time-bound marketing objectives and goals. The company's product strategy should focus on the Canadian consumers' beliefs, attitudes, consumption patterns, incomes, and preferences. The company should diversify its products to make them different from those of competitors. The prices should not be higher than those of the company's stores in the US and those of competitors. The company should solve supply issues by refilling the store shelves. The company should emphasize and publicize the concept of One-stop shopping by placing various products under one roof. The Company should uphold CSR by conserving the environment and packing the customers' shopping in recyclable and environmentally friendly materials. The promotional strategy ought to incorporate the internet, advertising and print media. Additionally it should use social media such as YouTube, Instagram, Yahoo, Twitter, and Facebook.

References

 "Target Finalizes Real Estate Transaction with Selection of 84 Additional Zellers Leases." Target Pressroom. September 23, 2011. Retrieved 2nd April 2015.
Flavelle, Dana (July 27, 2012). "Target plans up to 135 Canadian stores by 2013." Toronto Star. Retrieved 2nd April 2015.
 Frank, Robert (May 8, 2013). "Target starts staffing Laval locations." Robertfrankmedia.blogspot.ca. Retrieved 2nd April 2015.
Strauss, Marina (March 4, 2013). "With tips from the toy aisle, Target ready to launch." Toronto: The Globe and Mail. Retrieved 2nd April 2015.
Target Announces Soft Opening of 24 Stores in Western Canada". Canada Newswire. May 6, 2013. Retrieved 2nd April 2015.
 Target Canada.Target.ca (2013).
 Target Corporation (May 26, 2011). "Target Selects Initial Zellers Leases, Vast Majority to Become Target Stores." Target Corporation. Retrieved 2nd April 2015.
 Target opens first Canadian stores today". CBC News. The Canadian Press. March 5, 2013. Retrieved 2nd April 2015.
Tencer, Daniel. (2013)."Target Canada: Retailer Plans To Hire 'Thousands' Ahead Of Canadian Expansion". Huffington Post. Retrieved 2nd April 2015.
The Canadian Press (June 24, 2011). "Walmart picks up 39 Zellers sites from Target." CBC.ca. Retrieved 2nd April 2015.

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