If Target was looking for a way to bolster sales, announcing a Canada-wide shutdown may have been just the ticket.
As the Kelowna store opened Thursday morning, a steady stream of customers filed into the store with empty carts, and out again with bags upon bags of goods.
“I’ve never been here before,” said Kelowna resident Wes Parson, carrying a bag of discounted items he’d picked up. “But she (pointing to the woman at his side) said there would be some big deals today so I came along. Really, I think it’s a ploy. Look how busy it is.”
Busy isn’t the norm at the Kelowna store, explained one frequent shopper.
“That’s why I come here,” Chelsea Burnett. “It’s my go-to store. It’s always so quiet and clean. It’s better than WalMart.”
Another woman, who declined to share her name, had a slightly different take.
She too headed to the store in the morning in hopes of some good deals, but came out empty handed—something that she expected from the store she’d only been to a few times since its 2012 arrival.
“The shelves are never fully stocked and they never have what I’m looking for,” she said.
While shoppers were willing to share a few thoughts on the US-based retailer to shuttering its 133 Canadian stores, employees have been given direction from Target’s head office to not speak to the media.
It was clear from hushed conversations they were having with each other, however, that they had some thoughts on being among the 17,600 Canadians losing their livelihoods.
Target’s head office had no specific information on how many Kelowna based employees would be losing their jobs, but Target media contact Molly Snyder noted that each store employs somewhere in the area of 150 to 200 employees. That number aligns up with the number of employees the store had intended to hire when it announced its imminent Kelowna arrival in 2012.
Snyder also said that steps had been taken to ensure those employees would not be left in a lurch by the sudden withdrawal from Canada.
“We requested through the courts that the Target Corporation put together a trust,” she said. That trust is in the dollar range of $70 million and would ensure nearly all their employees receive a minimum of 16 weeks of compensation, including wages and benefits coverage, regardless of whether they’re staying on until the store’s last days.
A closing date for Kelowna’s Target has yet to be announced, but Snyder said that closures will take place in the next 16 to 20 weeks, as a court supervised liquidation gets underway.
It’s a stark contrast to what happened three years ago when Target entered the market.
As they moved into old Zellers buildings, Targets offered to breathe new life into local retail. The Kelowna store got a $10 million upgrade, according to a press release from the time, and expectations were high.
“It’s been no secret we have experienced a lot of operational challenges,” said Snyder, from the store’s American headquarters, noting there were no profitable Target stores.
“We came (to Canada) for the right reasons…but we did too much and too fast.”
Troubles with competitive pricing and ample stocking challenged the operation, she said.
“The team has made strides to overcome those challenges in recent weeks, but it ultimately proved to be too much.”
SFU business and marketing professor Lindsay Meredith said Target’s move into Canada was misguided from the start.
It launched with too many stores at once, he said, and it immediately turned off Canadians savvy to lower U.S. pricing when it instead charged prices in line with Canadian retailers.
“That was exactly what Canadians did not want to hear,” Meredith said.
When stores opened they were missing some of the U.S. brands in home decor and fashion shoppers wanted, he added.
Further blows that entrenched the retailer as a “screw-up” in Canadian minds included a massive data breach at the U.S. parent and recurring problems with empty store shelves.
“Empty shelves is a retailer’s kiss of death,” he said.
The latest challenge for Target has been the dive in the loonie to 84 cents U.S., which has left the company bridging a growing gap between what it pays for stock in the U.S. and what it sells it for in Canada.
But Meredith said he was surprised Target opted for a complete Canadian pull-out, coupled with creditor protection, rather than what he calls a “hedge hog defence” of retrenching to a small number of more profitable stores in key markets.
Big winners from Target’s demise will be established retail and grocery chains like Wal-Mart, Loblaws, Canadian Tire and even Sport Chek, Meredith predicted.
Target (TGT) stock is up about 1.2 per cent in afternoon trading on the news, to $75.22 USD a share.
The Canadian business is seeking court approval to begin liquidation, the Minneapolis-based retailer said in a statement.
The move will lead to a $5.4 billion write-down.
CEO Brian Cornell said in a statement that the company was “unable to find a realistic scenario that would get Target Canada to profitability until at least 2021.”
—With files from Black Press