# Target bye bye



## 1980z28 (Mar 4, 2010)

http://news.google.ca/news/url?sa=T...tIGQAg&usg=AFQjCNHMBpV7Dcou2HQO44cvMofa1sKCww


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## andrewf (Mar 1, 2010)

What a spectacular disaster... 

Target was a bit stuck on how to enter the Canadian market. Real estate is in short supply, so they had two options:

-very slowly ramp up their store network and grow slowly over the next two decades (low risk)
-buy an existing real estate network in decent locations and try to nail their entry on a large initial scale (high risk)

I won't say that the second high risk strategy was wrong, just that they should have invested far more in nailing their entry, from an IT, supply chain, and merchandizing perspective. My first surprise was looking at their first flyer on their grand opening and thinking 'meh'. They should have invested a lot very early in wowing customers and getting them into the store. They could not afford the luxury of growing organically.


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## HaroldCrump (Jun 10, 2009)

Not surprising...most Canadian shoppers' experience has been mixed.
Frequent complaints about empty shelves, advertised products not available etc.

IMO, they came to Canada with lower quality products & less variety than the US; and they over-priced their merchandize.
The decision to enter Canada in a big way would have been made during the days of falling consumer spending in the US (2009 - 2011), while Canadian consumer spending was still strong.
So they would have decided to take advantage of the situation by over-pricing their Canadian products, relative to the US.

Situation reversed itself in last 2 years, and they fell into the hole they dug themselves.


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## Eclectic12 (Oct 20, 2010)

It seemed to me that they were looking only at the US to Canada margins and missed understanding the challenges.

Where one is used to a significant discount at Target USA, it's going to be a double whammy when Target Canada is slightly cheaper than the existing competition.


Cheers

*PS*

Never did see the empty shelves ... but then again, with prices equal or marginally less, there was not reason to stop off compared to competitors who were on my route.

After the disappointment over specials/pricing, the main complaint I heard several times was how badly organised the in store Starbucks was.


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## SkyFall (Jun 19, 2012)

_''Target Corp. said Thursday that it is exiting its Canada business after just two years, saying it couldn’t find a realistic scenario that would get the segment to profitability by its goal of 2021.''_

source: http://www.marketwatch.com/story/target-to-quit-canada-after-just-two-years-2015-01-15

2021 wow!


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## 1980z28 (Mar 4, 2010)

Did someone say SALE!


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## OptsyEagle (Nov 29, 2009)

They thought Canadians were stupid ... and now they found out which group was actually lacking in the brain department.


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## carverman (Nov 8, 2010)

SkyFall said:


> _''Target Corp. said Thursday that it is exiting its Canada business after just two years, saying it couldn’t find a realistic scenario that would get the segment to profitability by its goal of 2021.''_


Finally! Why did they take so long? They were doomed from the start with their marketing strategy. I heard they replaced the
CEO last year in a last ditch effort to recover from their losses, but it never happened. I was wondering why they were
running these very expensive ads on TV before Christmas with the "Marshmallow World" theme and that ("Bullseye" (formerly known as Spot), a Bull Terrier and used as the official mascot of Target Corporation), that they used for their public media icon.

Too bad that they never managed to hit the "bullseye" in their marketing strategy. 
I guess that their dog is out of a PR job now,
along with all the workers they hired in their 133 stores...which was a flawed marketing strategy right from the beginning.


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## 1980z28 (Mar 4, 2010)

Sad for local employees


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## Ihatetaxes (May 5, 2010)

My wife is not happy. The store 2 minutes from us is pretty good and she has gradually increased her shopping there. Now what will replace it? Already a Wal-Mart nearby as well as Canadian Tire, Lowes, etc. Pretty big floor space for smaller retail chains so maybe it will sit empty.


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## Toronto.gal (Jan 8, 2010)

andrewf said:


> Target was a bit stuck on how to enter the Canadian market. Real estate is in short supply, so they had two options:
> 
> -very slowly ramp up their store network and grow slowly over the next two decades (low risk)
> -buy an existing real estate network in decent locations and try to nail their *entry on a large initial scale (high risk)*


Target thought they were moving into another part of the US, and why they opted for the riskier move I suppose. When I first read about their expansion/renovation plans [how many Zellers location they took, 200+?], I thought they were too confident thinking they knew Canada well, but in the end, that wasn't even the real problem.


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## 1980z28 (Mar 4, 2010)

Who is going to pay all that rent and tax when Target moves out


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## nobleea (Oct 11, 2013)

Unfortunate. We have one a 5 min walk from our house. We liked it, clean, well organized and stocked. Way better than the sh1thole zellers that was there before. We would get something there about once a week. Unfortunately their prices were not competitive with Superstore, even on sales. And their website was brutal. No pricing and couldn't search for items.


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## Islenska (May 4, 2011)

Can't stand box stores, having owned a small town drugstore they are dirty players

Actually not much competition for us anyway

And they treat their employees like ****!


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## axelis (Jan 13, 2015)

Were the prices or choice of items better than at similar box stores (I'm thinking Walmart specifically) or what is just about the same with a different logo? (I never had an opportunity to shop at Target in Canada - maybe now is the time though!)


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## nobleea (Oct 11, 2013)

axelis said:


> Were the prices or choice of items better than at similar box stores (I'm thinking Walmart specifically) or what is just about the same with a different logo? (I never had an opportunity to shop at Target in Canada - maybe now is the time though!)


Compared to Superstore here (never shopped at Walmart but lookign at the flyers its the same price as superstore), the prices were more expensive by maybe 10% and the selection was nowhere near as good.


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## andrewf (Mar 1, 2010)

My understanding is that the most likely candidates to acquire their locations are:

-Walmart
-Loblaws (potential Superstore locations)
-HBC relaunching a discount department store like Zellers

I think the failure will be instructive for other foreign retailers entering Canada. There have been quite a number that have done it successfully, but I'm not aware of any that have tried the 'big bang' approach like Target has and succeeded. It may have even been better to acquire and operate Zellers, and gradually convert the network to Target locations, starting at a small scale to ensure they have the systems, processes and merchandizing strategy refined before scaling up.


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## yyz (Aug 11, 2013)

1980z28 said:


> Who is going to pay all that rent and tax when Target moves out


Good question and RioCan has listed Target as the #7 and 2.1% of revenue tenant with about 8 years average lease length left.

Top 10 Sources of Revenue by Tenant (including US)
Rank Tenant Percentage of annualized rental revenue Weighted average remaining lease term (yrs)

7 Target Corporation 2.1% 8.2


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## axelis (Jan 13, 2015)

nobleea said:


> Compared to Superstore here (never shopped at Walmart but lookign at the flyers its the same price as superstore), the prices were more expensive by maybe 10% and the selection was nowhere near as good.


No wonder it didn't work...


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## HaroldCrump (Jun 10, 2009)

RioCan down 2.70% on this news, which is a pretty big move for a stock like REI.


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## 1980z28 (Mar 4, 2010)

HaroldCrump said:


> RioCan down 2.70% on this news, which is a pretty big move for a stock like REI.


Always going to get fallout from such a large employer


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## andrewf (Mar 1, 2010)

Tenant you mean?


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## Oldroe (Sep 18, 2009)

Wife said its a skinny person store. Apparently they just had smaller sizes.


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## Eclectic12 (Oct 20, 2010)

carverman said:


> Finally! Why did they take so long?
> They were doomed from the start with their marketing strategy.


 ... couldn't care less about the marketing ... quality & prices on the other hand doomed them as far as any purchases I might make.




Toronto.gal said:


> Target thought they were moving into another part of the US, and why they opted for the riskier move I suppose...


I thought I read at the time that both them and other US retailers were salivating as they thought that their adding a Canadian arm to their already built empire would mean cheaper prices for Canadians while giving higher than US margins to the Canadian arm. 

Without anything significantly cheaper ... there was nothing to draw me away from closer/existing stores.



axelis said:


> Were the prices or choice of items better than at similar box stores (I'm thinking Walmart specifically) or what is just about the same with a different logo? ...


From what I saw, the prices were worse than the Zellers that used to be there.


Cheers


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## CPA Candidate (Dec 15, 2013)

There's just way too much retail square footage in Canada and too much competition. In Winnipeg they just build and build and build and the population really isn't growing.

Several clothes retailing are going under, including most recently Mexx and Danier is in trouble.


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## 1980z28 (Mar 4, 2010)

andrewf said:


> Tenant you mean?


Yes

Tenant

Corporation

There will be logistics,suppliers,restaurants and many more that will also hurt

I am sorry for all the jobs that will be effected and their future


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## HaroldCrump (Jun 10, 2009)

1980z28 said:


> There will be logistics,suppliers,restaurants and many more that will also hurt
> I am sorry for all the jobs that will be effected and their future


This is why non unionized working serfs ask : _Where is my bailout_?
This very Monday, the federal & ON governments gave a $101M free grant to Linamar


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## newfoundlander61 (Feb 6, 2011)

A little off topic but I am surprised Sears Canada is not out of business yet.


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## My Own Advisor (Sep 24, 2012)

1980z28 said:


> Sad for local employees


+1


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## bayview (Nov 6, 2011)

newfoundlander61 said:


> A little off topic but I am surprised Sears Canada is not out of business yet.


Technically not yet but everyone knows it is just a matter of time while the owners work out the " best " exit strategy. You can tell when walking through Sears, there is no soul/spirit left in the retail stores, just like the days when Zellers were sold out to Target.


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## uptoolate (Oct 9, 2011)

Too bad but just didn't seem their heart was in it. Too bad all those small markets had to lose their Zellers for nothing.


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## donald (Apr 18, 2011)

Canadian debacle aside,Target as a whole from what i have read has some serious internal problems esp at the board level
I was somewhat following the whole Bill ackman take over(he existed a year ago i believe)
He took a huge stake in the company around 2007
A great piece on you tube about Ackman talking about Target(charlie Rose interview)
Something tells me Target has bigger issues ahead
It's not exactly like they are doing any better on their home turf
Seems like the hardest sector in the market
and to be fair,the shopping experience has changed*millenuims*online*(though different but the same in a lot of ways-jc.penny)
It def strengthens the moat for the canadian retailers in this space!


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## jackrabbit000 (Jan 16, 2015)

Went there once about 2 years ago, they didn't have anything in stock that I needed. Wasn't impressed and never sent back.


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## nathan79 (Feb 21, 2011)

I'll kind of miss them. The shopping experience is far more pleasant than Zellers was. The store is always clean and brightly lit. Levels of stock have improved dramatically over the last six months. The prices may be slightly higher than Walmart on average, but I typically shop the sales. I have compared some random stuff like toothpaste and it seemed about on par with Walmart.

As a consumer, I'm disappointed that I'll have one less place to shop at. I wouldn't be surprised if Walmart and other stores raised their prices in response to the reduction in competition.


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## HaroldCrump (Jun 10, 2009)

newfoundlander61 said:


> A little off topic but I am surprised Sears Canada is not out of business yet.


They are a "zombie" company at this point, somehow stitched together using loans from the parent corporation and share buybacks & accounting gimmicks, I suppose.
They have closed many stores, including the flagship one in the Square One Mall here in the GTA.
They don't have as many sales anymore, and most of the people in the store are just browsing.
Most of the buyers are either one-timers, led in by some special sale, or die-hard regulars from the catalog days.


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## dogcom (May 23, 2009)

What a dumbass set of executives, management and CEO to set up a business for a couple of years and then be done. Two years is no time in business to start anything so yes as mentioned they must have many problems. Also as mentioned we lost Zellers and all their employees along with the new Target employees for nothing.


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## HaroldCrump (Jun 10, 2009)

Many Zellers employees were offered positions at Target, as part of the lease buyout arrangement.
Not sure what % actually got offers, or accepted though.

I think Target's Canadian adventure smacks of hubris & ignorance.
They thought they would take advantage of Canadians' proclivity to shop, esp. at a time when the US retail sector was contracting (2009 - 2011).
They assumed they can bring inferior quality, less variety, and higher prices here and boost the margins of the parent company.

That whole PR campaign to promote "Tar-jay" just smacks of hubris.


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## carverman (Nov 8, 2010)

uptoolate said:


> Too bad but just didn't seem their heart was in it. Too bad all those small markets had to lose their Zellers for nothing.


Zellers was mostly owned by Hudson's Bay. They owned the Zellers name. 
HB decided to divest themselves of the bargain basement stores like Zellers and go upscale. Lots of Zellers stores were going down the drain in any case with their floor space sitting empty. Target picked up some of these stores but not all, apparently.

I saw that happen to one Zellers near me.
It stayed empty for over a year, (Zellers sign removed), then HB for some reason decided to make it a special Zellers liquidation store where their off shoot brands, stuff that didn't sell very well here in Canada, such as weird coloured clothing (red, yellow pants etc as well as weird womens shoes) could be displayed and sold for 30-40% less than the "sticker price" which was set high in the first place. I believe there are three of these stores around. 

Not sure if that experiment worked out for HB either.

HB is no longer a Canadian company, sold to American interests in 2008.


> Hudson's Bay Co. has been sold to a new American owner, NRDC Equity Partners, the parent of upscale U.S. chain Lord & Taylor.


http://www.cbc.ca/news/business/hbc-sold-to-new-u-s-owner-1.732741


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## Toronto.gal (Jan 8, 2010)

This statement made me chuckle: *'the company did not see any way to make Target Canada profitable until at least 2021'* [so did the 'brave' part].
http://www.forbes.com/sites/walterl...ew-ceo-makes-a-bold-decision-to-leave-canada/

'Tar-jay's previous/fired CEO, reportedly walked away with a $61M package.


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## carverman (Nov 8, 2010)

Toronto.gal said:


> This statement made me chuckle: *'the company did not see any way to make Target Canada profitable until at least 2021'* [so did the 'brave' part].
> 'Tar-jay's previous/fired CEO, reportedly walked away with a $61M package.


That is an understatement if I ever read one..the company has been placed in receivership..first step in the road to bankruptcy. 
As in any business endeavour that goes sour, there are winners with contracts and there are the losers..r
the rank and file that will be out of a job in 16 weeks.

Small towns like Smith Falls Ont, is devastated, as some American based companies have already pulled out such as Stanley Tools and Hershey chocolate, who's Canadian operations were based in a specially built factory ...that now is growing medicinal marijuana.

I think this is a the beginning of a exodus trend in Ontario, not sure about the rest of Canada. Many US based companies have pulled out already.
Wouldn't be surprised if GM moves most of their production to the US within 5 years.


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## Davis (Nov 11, 2014)

Sears is "a "zombie" company at this point, somehow stitched together using loans from the parent corporation and share buybacks & accounting gimmicks, I suppose."

Not at all, Sears is a successful real estate enterprise. they are making lots of money selling stores, and getting big bucks from mall-owners who willing to pay for the privilege of not having a Sears store any more.


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## HaroldCrump (Jun 10, 2009)

LOL, so basically they are liquidating the company.
It is devouring itself.

Almost all retailers have spun off their R/E holdings as separate registered entities or REITs, such as HBC, Canadian Tire, Loblaws, etc.
But their case is different because the primary business (retail) is still thriving, albeit at compressing margins.
Sears' core business is dying.


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## andrewf (Mar 1, 2010)

And those companies were structuring their real estate assets as a separate operating subsidiary for tax and cost of capital reasons.


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## carverman (Nov 8, 2010)

Latest news is that Sears Canada is sending out signals that they might be interested in some Target employees. 
Sears, who laid off hundreds of workers last year, as well as reducing their footprint in bricks and mortar stores across Canada.

Case of the "the blind ( Sears still hopefull they will survive)... leading the blind" ( desparate Target future unemployed).


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## HaroldCrump (Jun 10, 2009)

"Among the blind, the one-eyed man is the king".


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## andrewf (Mar 1, 2010)

I suspect that was Sears looking for some free publicity. They are closing stores themselves, and will not be hiring any appreciable number of the 17000 affected by Target exciting Canada.


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## fatcat (Nov 11, 2009)

i got a refrigerator fromm sears last may and they sort of begged to take a mastercard and so i have done some shopping there

sears is in big trouble

their merchandise selection, apart from tools and appliances is awful, really awful, they make the bay look like nordstrom

customer service is ok but still poor
the catalogue desk is still run by old ladies who do *not* like to do anything that isn't done the way they _used_ to do it

their web interface is average at best but well below amazon
delivery from web orders is incredibly slow (2 weeks for a pair of workout shorts)

the delivery of my refrigerator (which is excellent so far) was done by amateurs

i could go on, i don't see a path to survival for sears unless they change quickly, they clearly are trying but i don't think will make it


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## nathan79 (Feb 21, 2011)

Our local Sears store turned into a "clearance centre" last year. I was told it was temporary, but I'm sure that's what they tell everyone.


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