Target Canada: A Case Study on Multinational Business Failure

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PROJECT MANAGEMENT

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Table of contents
1. Introduction..................................................................................................................................3
2. Overview and background...........................................................................................................4
2.1 Inception of project....................................................................................................................4
2.2 Project stakeholders...............................................................................................................5
2.3 Key causes of losses..............................................................................................................5
3. Status of project...........................................................................................................................6
3.1 Overview................................................................................................................................6
3.2 Detailed timeline....................................................................................................................7
4. Critical Questions......................................................................................................................11
5. Critical evaluation and analysis.................................................................................................12
5.1 Causes of Failure.................................................................................................................12
6. Lesson learned...........................................................................................................................16
7. Recommendation.......................................................................................................................18
8. Conclusion..............................................................................................................................20
9. References..............................................................................................................................21

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1. Introduction
Target Corporation had to abandon the 4.4 billion dollar expansion in Canada within 2 years of
its initiation in 2013. The super retailer had to pull out of the business from the country because
it racked up over two billion dollars in losses. In its effort to please the investor's Target had
promised that the Canadian business was expected to become profitable by the end of 2013. This
seems to be a good case study to evaluate how are a multinational business fails and identify the
several causes that are associated with it. The Canadian subsidiary of Target Corporation was
Target Canada and it was the second largest retailer store in the United States.
It was formerly headquarters in the state of Ontario and was formed by exploiting an acquisition
deal of locations of Zellers with The Hudson's Bay Company in the year of 2011 and began the
operations by 2013. At the end of its Run, Target Canada was operating over 130 locations.
Target Canada was unsuccessful due to a very aggressive initiative for expansion complemented
by high prices and a very limited selection of the products they were selling. They were also
overrun by the local market chains like Loblaws as well as there rival, Walmart. Target Canada
was indeed an outstanding failure.
The present report will try to understand the overview as well as the background that led to the
demise of Target Canada. In order to do so is necessary to conduct an overview of the company
and provide the background leading to the disaster. This will be followed by analysing the
project status as well as a detailed timeline until the business was closed. In order to make
inferences, critical questions will be based on which the causes of failures will be evaluated and
recommendations would be provided on the basis of the lessons that were learnt in the process.

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2. Overview and background
Even before Target Corporation was able to initiate the activities in the Canadian market there
was a large volume of retailers who without any affiliation from the company made use of the
brand Target (Midgets & Schuster). Before entering the Canadian market, Target Corporation
tried to solidify its brand name by purchasing the Canadian TM right of the businesses that were
using the brand name as well as new applications for their own. The Trademark issues with
Target continued and the expansion activities undertaken by Target Corporation was under
Jeopardy due to a rival party which has claimed the Canadian right for the brand name Target in
the context of Apparels and clothing.
The trademark was registered to Dylex Ltd. a company which defunctioned in 2010. However,
these rights had been acquired by Fairweather Ltd. In the year 2012 after a long ordeal in courts,
it was announced that both the parties had reached an agreement which stated that Fairweather
Ltd. was to cease the use of the TM Target apparel by the year 2013 which actually provided
Target Canada with the complete ownership of the brand in Canada. As pointed out by Yoder,
Visich & Rustambekov (2016), it should be noted that rumours were in circulation pertaining to
the expansion activities of Target Corporation since 2004. The rumours also claimed that Target
Corporation would try to acquire Zellers.
2.1 Inception of project
In 2010 the long term International expansion plans were released in the public domain by the
company. This plan also included Canadian expansion. In the year 2011, Target Corporation
officially announced that it was planning to purchase lease agreements of over 200 Zeller store
for a sum of nearly 2 billion Canadian dollars. The agreement between the two parties stated that
Zellers was to sublease their property and had the permission to continue the operations as

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Zellers till 2012 (Koi-Akrofi, 2016). This retailer chain was not completely bought out by Target
and Zellers was left with operating only 64 stores in locations which were less desirable.
2.2 Project stakeholders
The parent company of the brand, HBC was unable to overcome the geographical constraints and
in 2012 they closed all the remaining stores. In 2011, Target Corporation notified the consumers
that 105 stores had been chosen that would be converted to outlets of Target Corporation. By the
end of 2011, Target announced an additional 89 stores for selections, converting 189 Zellers
stores to Target. According to Zhou, Xie & Wang (2016), the company had a plan to initiate the
first store opening cycle in March or April of 2013. They would be followed by 4 additional
store opening cycle later in the year.
In order to convert the stores, the outlets were closed for 6 to 9 months and subjected to a
significant amount of remodelling as well as renovation. In order to run the stores, Target
Corporation had announced that it would hire over 25,000 new employees for supporting the
expansion move in the Canadian market in addition to 5000 from Quebec (Freeman, 2016). The
food, as well as grocery items, was procured from Sobey’s for the Canadian market.
2.3 Key causes of losses
The stores that were acquired from Hudson's Bay had been located in shopping centres that were
rundown and thus, hard to access. In comparison to the US counterpart, the Target stores in
Canada were smaller and in order to expand and convert to the brand endorsed layout required
more money. The Canadian consumers also complained that the Target was conducting unfair
pricing policies as they noted that the overall value proposition of visiting a Canadian Target
Store is lesser than that going to the US stores or buying online. According to Johnston (2014),

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unfair pricing complemented by ruthless competition by Walmart Canada did not bore well for
the Target.
Perhaps the biggest blow to the brand image was the fact that the store shelves were disorganised
or empty since the selection of products was limited. In order to fill the shelves, the company
build half of the entire aisle with only a single product which irked a lot of consumers. As
already mentioned, Walmart which and expanded into Canada two years before the Target had
been giving a tough time to the company (Austen, 2014). Walmart was able to establish itself as
a house household name for its willingness to engage in discounting. In the hindsight, it can be
said that Target was overambitious in its efforts which can be evident from the fact that they had
opened over 120 stores in a little over 10 months of entering the Canadian market.
Tony Fisher was the president of Target Canada and he was sure of the fact that Canadian
consumer will still go to purchase from Target stores located in the United States. As observed
by Luce (2013), he was also the person to acknowledge the fact that the price parity between the
US and Canadian stores will not be same as the transportation cost, distribution cost, fuel cost,
wage rates, tax rates, duties and cost of goods were higher in Canada in comparison to the United
States. The Canadian market is very different from the densely populated Marketplace in the
United States and due to the legal complexities, the existing distribution network of the retail
chain giant was not of much use in Canada.
3. Status of project
3.1 Overview
Let's take a look at the journey of Target Canada from acquiring the leases for the stores till it
pulled down the shutters. This is a brief overview with summarises the entire project from its
initiation in 2011 till its failure in 2015.