Target’s public relationship with Canada lasted about 4 years to the day, the average length of an Elizabeth Taylor marriage, with the announcement of its arrival January 13, 2011 and the announcement of its departure, January 15, 2015.
Here’s a trip down memory lane.
Note that all links worked when this post was originally written but because external sites change, might not be active when you try to visit them.
||The Announcement Day: January 13, 2011
||Target buys Zellers leases for $1.8B
“When is Target going to buy Zellers and come to Canada?” has been the most-asked question posed to this reporter over the years at the office water cooler and at parties — it seems most consumers who have visited the cheap chic Wal-Mart rival as it successfully expanded across the U.S. prefer its cheap chic stylings to that of Zellers. (Close behind in popularity: “When is J Crew coming to Canada?” That is supposed to happen at a mystery location in Toronto later this year. Stay tuned!)
||Saw some early problems:
||Starting with another store that named itself Target in anticipation of the moment:
Commenting on Target’s arrival, one American retail analyst commented that Canadians have “had so many lousy retailers like Zellers and all these crappy guys. You’ve had all these dumps who acted like retailers but really were cadavers,” Mr. Davidowitz said.
||Emerging Designer Award winner’s collection for its Quebec stores; Toronto Fashion Incubator’s New Labels contest winner gets cross-Canada exposure
|Flash forward to 2015
||Opening day—and already sensing problems
||In this interview with then Target Canada president Tony Fisher (Why Canadians are paying more at Target), Globe and Mail retail reporter Marina Strauss focuses on the already noticeable differences in prices between Target Canada and Target USA.
Here are my 2013 notes on this article:
“Geez this guy sounds culturally limited. Look at the comments on Halifax, as if the interviewer—a Canadian—had no knowledge of it.”
||Anticipating the unthinkable
||By Fall 2014, rumors started to swirl that Target was considering exiting Canada—many in response to analysts suggestions that Target high-tail it back to the USA.
However, the retailer expanded aggressively in the region without setting up an effective supply chain to supplement its needs. Due to Canadian packaging laws, protectionist tariffs on certain food products and exclusive wholesale agreements, Target’s U.S. network cannot serve its Canadian business. Hence, the retailer had established a fresh supply chain network for Canada, which wasn’t too efficient.
Due to this, customer response to Target was much worse than the cheap chic retailer expected, which resulted in low store traffic and subsequently, heavy markdowns.
||Continuing to anticipate the unthinkable
||Why Canada Is Giving Target Heartburn
||The unthinkable happens
||Within days of the departure—and for weeks afterwards—many offered their explanations of Target’s demise. Each offered a unique insight but they all tended to focus on the same general issues (analyses posted in chronological order):
||Looking every bit the hasty exit
||Target Canada sped up its exit as quickly as possible, leaving unpaid suppliers, miffed landlords, and an angry public in its wake:
||Noticing the human toll of the exit
||Target employed 17,600 workers in Canada and a few hundred more in its headquarters in the US. In addition, several suppliers relied on Target for sizeable percentages of their businesses. Some reporters explored this human toll to the loss:
||Becoming a messy exit, too
||Some of the most serious long-term problems arising from the Target exit appeared a few months after the last store closed. A number of the problems arose from difficulties in re-leasing the former stores, most of which were slow to find new tenants (and are still unoccupied); others arose from unpaid creditors.
||Leaving some lasting lessons
||Target is recovering
||As embarrassing as the Canadian exit might have been and as angry as it left Canadians, it also left Target free to focus on fixing its larger problem: its lackluster American operations that were still reeling from the massive data breach in 2013 and a multi-year sidetrip into groceries that resulted in “dulling” the rest of the store and its merchandise.
|And the inside story starts to emerge
||About a year after announcing closing: January 21, 2016
||The Last Days of Target, which provides an insider’s story of how Target veered so off-track in Canada, starting with an almost impulsive purchase of Zellers’ leases which, in turn forced an accelerated launch in Canada as well as an ill-advised and ultimately business-ruining choices about inventory and point-of-sale technology and, for good measure, skimping on training. Its otherwise engaged and committee workforce didn’t stand a chance.
In the summer of 2013, after the announcement that Les Ailes de la Mode was closing its downtown Montreal store, the owners of Montreal’s Complexe Les Aisles (a mall partially created when the store Les Ailes declared bankruptcy, downsized, and converted the extra space into stores) and Eaton Centre, announced that the two malls would be joined, remodelled, and rebranded. The joining is no big deal: the two malls are adjacent and physical connections already exist. Plans were supposed to be announced 6 months later.
Over two years later, the Les Ailes store is still in a perpetual “vente de fermeture” and no word about the “new” mall.
The first real hint of the future came with today’s Retail-Insider.com: Saks Off-Fifth is opening in the mall. One of seven Off-Fifth sites announced yesterday, the downtown Montreal site. . .
will open in the fall of 2018. The store will likely be one of OFF 5TH’s largest Canadian stores, spanning an impressive 44,840 square feet. In 2016, Montreal Eaton Centre will merge with the space currently known as Complexe Les Ailes to form a single property, welcoming a combined 34 million visitors a year.
I figured that the owners of the malls were waiting for a major tenant announcement before announcing plans. An off-price retailer wasn’t in my sights. I speculated that HBC might locate its Montreal Saks Fifth Avenue store there (which made little sense, because they could easily fit it into the nearby Hudson’s Bay store, just as they are doing in Toronto and industry insiders speculated they would do) or that Simons might relocate there (compared to its new stores, especially the larger and chicer store at Galeries d’Anjou, the Ste-Catherine flagship is starting to look a bit small and dated).
Looking forward to hearing more about the newly merged centres, a move now scheduled for next year.
(HBC also announced that OffFifth will open in the former Holt Renfrew store at Place Ste-Foy in Quebec City.)
A few months ago, Staples (Bureau en Gros in Quebec) announced the closure of 10 percent of its stores.
This week, Canadian office supply chain Grand & Toy, which is a unit of Office Depot, bested Staples by announcing the closure of all of its Canadian stores. According to news sources, Grand & Toy receives as little as 3 percent of its business from walk-ins. It conducts the bulk of its business through online and catalog sales, or direct sales from a marketing representative.
Still, the closing of Grand & Toy feels like the end of an era. It’s the oldest Canadian office chain,founded in Toronto in 1882, run as a local, independent company for the next 108 years. A restaurant chain bought it in 1990 (I have no idea why), then OfficeMax bought the chain 6 years later. OfficeMax merged with Office Depot a few years ago.
Grand & Toy has increasingly moved away from retail as a sales channel, and has slowly closed stores since. Only 19 remained. Soon, they’ll be history.
Grand & Toy will continue, but 190 workers will lose their jobs. And consumers will have to get their fix of browsing office supplies by visiting other stores like Staples, Walmart, Target or their neighborhood Pharmaprix (Shoppers).
For more on the story, click here.
This weekend, I stumbled onto a blog that covers all things retail in Canada. For those of you who know me, you know how I spent the rest of the weekend.
Among the interesting tidbits I learned combing through 18 months of coverage:
- What’s the number one activity for travellers visiting Canada? Shopping. Interest is 14% higher than sightseeing (number two activity) and 36% higher than visiting family (number three activity).
That surprises me; even the Canadian government says that prices are high here compared to the US. And 60 percent of those visitors merely cross the border from the US. Perhaps all of the visitors are visiting the behemoth of Edmonton.
- Greater Montreal will soon have its own Premium Outlets (the best brand in outlet shopping). Montreal Premium Outlets are located in the town of Mirabel, about 30 km north of the city (and not in the old airport). According to the Retail Insider, possible tenants include outlets from HBC, Ralph Lauren, and Max Mara. Now I wonder who will fill the 77 other spots. The new complex will open some time in 2014 and will be reached through a new exit off of Autoroute 15 north.
- Saks is coming to town. The Retail Insider speculates that the luxury retailer will carve space out of the Hudson Bay stores at the Ste-Catherine or Carrefour Laval. I don’t know where it would go in Laval? They just opened a two-story Topshop/Topman store-within-a-store by dropping the housewares department, second floor washrooms, and always-empty cafeteria. I’m not sure what else they can drop unless they go to self-service check out. The Ste-Catherine Street Hudson’s Bay store, on the other hand, has tons of space. They could carve a Saks out of one of the many additions to the building.
- Speaking of Ste-Catherine Street, it’s the third most expensive retail spot in Canada. According to the Retail Insider, rents are $200/square foot. Rue de la Montagne (a side street off of Ste-Catherine) commands the tenth highest rents ($60/square foot) as does Greene Avenue in Westmount (number eleven). Greene Avenue is nice but not quite sure why it commands top dollar.
- The most expensive rents in Canada are at Yorkdale Mall in Toronto, which is apparently not only the most “productive” mall in Canada but all of North America, taking the top spot from one of my favorites—South Coast Plaza in Costa Mesa (Orange County), California. And Yorkdale doesn’t have a Macy’s Home Store, Container Store (admittedly in an outbuilding), or Z Gallerie. In fact, 9 of the top 15 malls in North America are in Canada.
- Speaking of Yorkdale, Zara Home opened its first store in North America at the mall a couple of months ago. The second (and larger) store opened at Carrefour Laval a few weeks ago. Even on this side of the ocean, I don’t understand that store but apparently, I’m not the kind of shopper who buys 5 place settings of garish faux gold silverware on impulse as well as by the piece.
- Finally, Kleinfeld’s—the store that hosts the original Say Yes to the Dress (that educational series on The Learning Channel (the meaning of the TLC acronym)—are opening an outpost at the Hudson’s Bay store on Queen Street in Toronto. Does that mean we’ll be seeing a Say Yes to the Dress Canada show soon?
Learn more about these and other retail developments at www.retail-insider.com.
In contrast to the depressing topic of last month, let’s launch into spring with a brighter one: mall paradise.
Looking for a mall paradise? According to a story in the New York Times, the new world capital of malls is Moscow.
The story notes that real estate developers are building the world’s largest mall outside of Asia in Moscow (thus ensuring that, even in its ghost state, the Mall of China remains the world’s largest mall). Another mall boasts higher visitorship than the Mall of America. Moscow alone now has 82 malls. Among them are recently arrived outlet malls.
A few factors seem to fuel this development. First, in a cold country like Russia, malls are warm places to visit with lots of place to roam. Second, Russia was left out of the mall building boom of the 1980s and 1990s. Third, according to the story, because of “socialized medicine and high levels of home ownership” (a legacy of the Soviet era), “Russians have some of the highest disposable income for retail expenditures.”
That’s not lost on international chain stores. Indeed, one of the major developers of malls in Russia is IKEA.
To read the story, click here.