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Yahrtzeit for Target (Addendum): A Reading List

27 Apr

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.

High hopes The Announcement Day: January 13, 2011 Target buys Zellers leases for $1.8B

Met with

“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.

2012 Excitement builds 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  
2013 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.”

 

2014 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.

 

2015 Continuing to anticipate the unthinkable Why Canada Is Giving Target Heartburn

 

The unthinkable happens
Instant answers 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.

 

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Yahrzteit for Target Canada (Part 2 of 2): The Long-Term Impact

20 Apr

April 12 marked the 1-year anniversary of the closing of Target stores in Canada. In the Jewish tradition, we mark the anniversary of a passing by observing yahrzteit, or remembering.

And in a pair of essays, I reflect on Target Canada. In Part One I reflected my long-term relationship with Target.

In Part Two, I take a step back. Although Target might have only lasted about 2 years  in Canada (some stores as few as 6 months), because of the size and scale of the operation, it will continue to affect  Canadian retail for the foreseeable future.   In this essay, I identify some of the long-term impacts and lessons about the Target fiasco in the Far North.

  1. Target actually had some better brands of merchandise in Canada than in the US. For example, in its housewares department, Target Canada carried the Joseph Joseph line of high fashion kitchen accessories. Target USA does not carry this line; JC Penney had it the last time I checked (a few months ago). Joseph Joseph is also carried by the Bay in Canada and Macys in the USA—“next step up” stores.

But I’m not sure anyone noticed and I don’t remember Target making much of an effort to promote this.

And Target should have.

Target carries the Kitchen Aid line in its USA stores but Canadian Tire seems to have an exclusive on that line in Canada, meaning that Target couldn’t carry all of the merchandise in Canada that it carries in the USA because of existing agreements between the same suppliers and other stores. (I conjecture this because I don’t see it elsewhere and Target didn’t carry it.)

Even before it opened, Target said it would have some unique products in Canada that it didn’t sell in the US. In the case of housewares, Target “traded up” for some better merchandise but never really announced it. They should have promoted Target Canada exclusives in store and in its advertising and defined exclusive as either not available in Target USA or only available at Target.

  1. Target got help screwing up some of its Canadian merchandising. Although Target admittedly has primary blame for its failure in Canada, it actually had help screwing up a number of its departments. As I noted in the previous post  (and others have noted, too), Target had a lousy and overpriced merchandise mix—especially in groceries and health and beauty- pharmacy. But in many parts of the country, Target relied on a major local supplier to help with those. Groceries were supplied by Sobey’s and, at least in Quebec, pharmacy was supplied by Brunet (part of the Metro group).

I only know about these from what I read in the paper and saw in the stores, but as I understand the situation, they were supposed to provide a Canadian imprint on these departments. The problem is, they put a Sobey’s or Brunet imprint on these departments, someone forgot that these are Target departments.

It appears that no comparison was made with the merchandise mix at Target US and Target Canada, something that Target should have overseen and required of its suppliers. Furthermore, it appears that no effort was made to coordinate store brands between the two countries; it appears that Sobey’s and Brunet store brand products was merely packaged in Target store brand packaging. So what appeared to be similar or identical products to Target USA on the outside seemed like substantially different products on the inside.

  1. Target might not have lasted, but mall upgrades made to accommodate it have. Before Target announced its entry into Canada, many Canadian malls—especially in the Class B and Class C ranges—had delayed necessary renovations. Malls like Galeries d’Anjou in Montreal and Bayshore Centre in Ottawa appeared stuck in the 1990s, both in terms of appearance and lackluster store mix.

Expecting greater foot traffic from Target, however, these malls finally entered the second decade of the new millennium. They remodeled their interiors, updating color schemes, furnishings, and decorative elements. They reworked their store mixes. The updated malls appeared more fashion-forward and reflective of the times.

Want more details? See my recent reviews of Galeries d’Anjou, Bayshore Centre, and Place Vertu—B and C malls that remodeled around the time that Target arrived.

  1. Target might not have lasted but upgrades to its competitors leave them in stronger positions long-term. Target thoughtfully gave Canadian retailers two years’ warning of its arrival and the retailers used that time to significantly up their game. And most major retailers did, with Canadian consumers benefitting long-term, even if Target didn’t last. Consider these long-lasting improvements to some iconic Canadian retailers:
  • Canadian Tire. Strengthened its coverage of the basics and customer service, and re-emphasized its place in Canadian communities to maintain its place as the go-to-store for anything basic in the household, the place that Target tried—and ultimately failed—to supplant. Instead, Canadian Tire seems to have strengthened its role as the go-to store for anything basic in the household.
  • Hudson’s Bay: Transitioned from a ho-hum four-century-old operation to one that looks relevant and new. (Of course, the $1.2 billion it received from selling its Zellers leases to Target helped.) It emphasized higher end and quality fashion and home furnishings to distinguish it from the cheap chic expected from Target.
  • Loblaws: Strengthened the design appeal of its housewares (looking chicer than Target’s while offering similarly low prices) and launched the Joe Fresh clothing line, which challenges Target’s on price and style.

In a bit of tit-for-tat, Loblaws tried to strike back by launching Joe Fresh in the USA. As Target failed in Canada, so Joe Fresh seems to have quickly gone stale in the US: its relationship with JC Penney cut short and its Fifth Avenue flagship in New York quickly closed.

  • Metro: The central and eastern Canada grocer continued to focus on groceries, but upscaled the experience. It brought all of its stores under the Metro brand (previously limited to Quebec) and reworked its logo Metro also expanded its prepared foods, strengthened its store brand, and launched an American-style grocery store loyalty program (Metro et moi / Metro and me).
  • Sears Canada: Although on a self-inflicted death spiral (mostly because its owner, Eddie Lampert, seems to only care about its real estate and can’t seem to hire a merchant willing to lead the store longer than a year), Sears made some nominal moves to counter Target, including a couple of store remodels in malls where Target would also locate (like Galeries d’Anjou in Montreal).

But Sears most interesting moves came after the store closed, when it offered jobs to Target employees. Admittedly, that was a head scratcher, as Sears has been laying off employees with increasing regularity. But in the end, Sears is still here and Target isn’t.

  • Walmart: Already having had upped its design game for US stores to compete against Target’s admittedly diminished housewares (which suffering from the departure of major designers like Michael Graves), Walmart decided to primarily compete with Target in the grocery department, expanding many of its existing Walmart (which have a small grocery section) to Walmart Supercentres (which have full-line grocery stores in addition to all of the other departments).
  1. Target might not have lasted, but some of its empty storefronts will serve as long-term reminders of the failure. One of the long-term problems of Target leaving is that it also leaves lots of empty space: about 2 to 3% of all retail space in Canada. About a third of its leases were picked up within 9 months—some by Walmart, some by Lowe’s, some by a gym—but the majority are vacant and are likely to remain that way.

That’s because the demand for 120,000 square foot stores is limited. A few malls are rebuilding the space so they can lease smaller stores.

But in a climate whose medium-term outlook for the next few years is flat, absorbing all of that still-vacant space remains a challenge.

So shadows of Target signs remain on walls in and out of malls that look like Target bullesyes but aren’t any more.

And nothing looks more creepy than a big vacant store.

  1. Target needs to revisit its playbook for entering a market, especially if it tries again to enter international markets with bricks-and-mortar stores. Target likes to enter new markets by making a splash and launch a number of stores all at once.

According to the in-depth report on the last days of Target Canada in Canadian Business, Target felt compelled to open quickly in Canada because they had acquired so many leases and could not afford to pay rent on so much vacant real estate for an extended period of time.   

This certainly sounds plausible.

But it overlooks Target’s history: how Target entered new markets in the US. It reads just like the playbook for Target Canada.  When possible, Target would buy the real estate of a distressed competitor, such as Richway in Atlanta and Ames in Boston. If necessary (as it was in Atlanta), Target waited until after the store liquidated its merchandise and formally laid off its staff, before bringing in the construction crews and hiring teams to open a new Target.

That’s what happened with Target’s purchase of Zellers leases.

The massive construction-then-massive-launch approach might work in the US, where communities are increasingly similar in their day-to-day needs, and, except for some local variations, the company would still retain its basic supplier relationships, operating logistics, and HR practices (with minor adjustments for local laws and customs).

But even though the population of Canada is about the same size of California (or about 5 Target market areas), it’s a different country and Target could have considered an entirely different playbook.

Rather than buying the leases, emptying the stores, laying off all of the talent, and investing in reconstruction, Target could have purchased Zellers’ outright, taken advantage of its expertise, supplier relationships, ongoing operations,  and, significantly, functioning inventory control system, then made adjustments as it learned the market and slowly but surely convert the Zellers stores to the Target nameplate, learning from the successful lessons of Walmart’s successful entry into Canada at Woolco stores.

  1. Although Targets policies are written to value human resources, its choices in Canada suggest that a bridge still exists between what’s written on paper and what’s practiced in the business.  One reason that Target has chosen to wait to occupy a former retailers’ space rather than merely take over its business as described above is that Target is a non-union company and most of the stores it has replaced had unionized staffs. Without going into the pro- or anti-union issue, which is beyond the scope of this discussion, practical considerations suggest that addressing broader business needs might necessitate rethinking this employment practice.

In this particular situation, Zellers was a functioning business and Target would have rebuild all of that from scratch.

But Target also ignored the practical limitations of the real world when choosing to do so, because the company made three other choices that rely on effectively managing human capital dimensions and, in both cases, made disastrous choices.

The first two choices are related: planning to open 133 stores across Canada within three years and launching a two significant pieces of technology–an inventory control system and a point-of-sale system–both of which touch on every part of the organization. Both timetables were unrealistic, but especially the inventory control system, on which the entire operation of Target depended.

Anyone with passing knowledge of enterprise systems knows that such a comprehensive system cannot be launched in two years, no matter how smart the people working on the team or how experienced the systems integrator (Accenture in this case.)  Canadian Business has an amazing post-mortem of the situation. Both systems probably could have been successful if management had been realistic about the schedules for systems planning, installation, customization, and implementation. And they could have been realistic, because a wide body of experience with enterprise systems in general, and inventory and point of sales systems, in particular is available. But management chose to ignore that  almost all of that history suggests that a successful implementation requires three to five years.In other words, they ignored one of the most basic principles of human performance: the best predictor of future performance is past performance.

The third choice Target made was to shortchange training.  I had been aware of that problem; I had spoken informally with certified trainers whom Target lured from other Canadian retailers. But the trainers I spoke to were hired on contract and told me that, as soon as initial training was complete, Target dismissed them. Ironically, these trainers provided training on their systems.

That might not have been as serious of a problem in Target USA, the company not only has functioning inventory control and point-of-sale systems, but also has experienced workers who can provide the development needed to bridge the gap between classroom training and the job.

But all of Target Canada’s employees were new and, as happens in situations like these,  relied on incidental, on-the-job learning rather than close supervision and mentorship, some of which was not feasible because of the general inexperience of the Target Canada staff, but some of that supervision and mentorship not feasible because the company chose to provide less rather than more training, when learners could be observed performing successfully before they return to the workplace.

And some of the informal lessons learned turned out to be how to game the system. In doing so,  staff exacerbated an already public and humiliating problem with inventory. As reported in Canadian Business: 

Business analysts (who were young and fresh out of school, remember) were judged based on the percentage of their products that were in stock at any given time, and a low percentage would result in a phone call from a vice-president demanding an explanation. But by flipping the auto-replenishment switch off, the system wouldn’t report an item as out of stock, so the analyst’s numbers would look good on paper. “They figured out how to game the system,” says a former employee. “They didn’t want to get in trouble and they didn’t really understand the implications.”

Although presented in the magazine as a technology issue, the situation sounds like a classic human resources management and development problem.

By all accounts, despite these problems, Target had a committed and engaged workforce according to the Canadian Business report. But a committed and engaged workforce can only go so far when the system sets that workforce up for failure.

  1. Bankruptcy is ugly. It humbles even the great. In bankruptcy, Target violated its own century-old values as a corporation and seriously tarnished its image in the Canadian community. It wrote checks to community organizations just before the bankruptcy that bounced when the community organizations tried to cash the checks within days of the bankruptcy. It laid off nearly 18,000 of its own workers, and cost thousands more their jobs. It ruined suppliers. It raised questions about its own ethics by the choice of bankruptcy statute to use in its filing. The manner in which it tried to get out of its leases further tarnished its reputation and the company found itself in protracted court proceedings over its bankruptcy plan.

In other words, Target lost more than billions of dollars in this failure; it lost a part of its soul, even if most of that news was only covered in Canada and received far less coverage in the USA.

  1. Target USA does seem to be recovering. Although the stated reason for departing Canada is that the company saw no path to profitability before 2021, if even then, part of the reason has to be that its US stores needed primary attention. Although everyone talks about how lousy the Canadian stores were, the USA stores weren’t so wonderful. Sales were flat. The chic had departed and, even in harsher times, cheap alone wasn’t attracting customers. And with a data breach of massive proportions, the company lost the trust of its customers, too.

Around the time of the Canadian departure, Target executives announced efforts to revitalize the product line and shopping experience. The proof would have to show itself on the showroom floor.

And it is starting to. As noted in Part One, the housewares section has been reimagined and the displays are impressive. I have seen pictures of a reimagined grocery section, which is supposed to have a strengthened focus on healthier foods. If those pictures of the prototypes eventually appear in the grocery department, that department, too, should show new signs of life.

In other words, closing the Canadian stores to concentrate on the American stores was not only a good business decision, it also appears to be one bearing fruit for Target. (That some post-Canada earnings reports have shown signs of life further supports that decision.)

  1. Target does not seem to have learned all of its lessons about international retailing. Although Target got many things wrong when it tried to enter Canada, it did recognize that, at the least, it needed to be culturally sensitive to shoppers in Quebec and made a strident effort to understand its culture. The problem was, Target didn’t understand the local shopping habits and just assumed people would  change them, just because Target is Target. Target was wrong.

Similarly, although Target acknowledges that it failed in Canada, it seems to have ignored anything that could have been learned from the experience when the store opened an international website. The site allows visitors to shop at Target.com and ship to countries outside the USA. But this international website offers the same value proposition as its Canadian stores—fewer products available at much worse prices.

On the one hand, I doubt many Canadians will shop there.

On the other hand, visiting the site and seeing the crappy selection and lousier prices gives us a nice chuckle.

Perhaps that was the point. (Probably not, but just in case…)

 

Yahrtzeit for Target Canada (Part 1 of 2): My Relationship with Target

12 Apr

Today marks the 1-year anniversary of the closing of Target stores in Canada. In the Jewish tradition, we mark the anniversary of a passing by observing yahrzteit, or remembering.

And in a pair of essays, I reflect on Target Canada.

Most analyses of the fiasco tend to repeat the same points over and over again: Target overreached. Target couldn’t get its product mix right. Even when they did, they couldn’t get the stock levels and prices right.

So, in this reflection, I’d like to do something different. In the first part, I explain what Target means to me personally. In the second part, I talk about some of the longer-term effects of Target’s entrance and exit, about which few people have focused.

Starting My Long-Term Relationship with Target

My first contact with Target was the night of my fraternity initiation at a university in Pittsburgh. I can’t reveal the details of the secret ceremony–partly because I swore an oath of secrecy but mostly because they were actually short of memorable–but I can say that the ceremony involved waiting.

Endless waiting…. what seemed like an eternity.

I finally got so bored that I started reading magazines lying around the room.

One–a business magazine (I don’t remember which one)–profiles Dayton-Hudson, family-owned department store chain in Minnesota that managed stay independent when all of the other American chains had been acquired by the likes of Federated, Allied, May, and similar conglomerates. The profile noted that one of the strategies used by  Dayton-Hudson to remain independent was launching it own discount chain called Target.

Dayton’s (the department store) and Target (the discount department store) both sounded like they had a bit of an edge that was already being lost in the department and discount store business in the Mid-Atlantic, which was led by drab, poor-service department stores like May-owned Kaufmann’s and the Hecht Company.

I wanted to check out these stores, but they were located in the Upper Midwest and the western boundary of my world was Pittsburgh.

The Early Years

For reasons unrelated to Dayton’s or Target, I ended up moving to Rochester, Minnesota three years later. So I sought out the two stores. Dayton’s had a beautiful department store in Rochester that still had many of the departments that other department stores back east had dropped, like notions. I was so intent on buying something at Dayton’s that I bought a mattress for my first home there on a one-day sale, even bought I hadn’t leased an apartment yet.

Unfortunately, Target didn’t have an outlet in Rochester yet (as disappointing to me as it was to the entire population of Rochester. So the day before I started my job, I drove to Minneapolis with Target at the top of the list of places to visit.

I was entranced: it was everything K-Mart wasn’t: great prices, great style, a pleasant place to shop, and no annoying announcements for blue light specials. (I probably shouldn’t put it that way; I had a friend in Rochester who used to make those announcements.)

Although I had student loans, just bought a car, leased an apartment to go with my mattress, and was still paying off an expensive watch I gave myself as a graduation gift (which a friend encouraged me to buy because I had a Visa card), I couldn’t help myself and bought $US 69 worth of stuff (in 2016 currency, that’s $US 211 today). I still keep a $US 3.99 wicker basket and $US 10 oriental rug I bought that day as momentos of the visit.

That trip began a monthly routine of visiting the Twin Cities, and no trip was complete without a Target run.  And no matter how small my shopping list, I always spent a minimum of $50 per visit, usually more. But I charged it to my Dayton’s credit card, which also worked at Target.

Within a few years, Target finally opened in Rochester and the city observed an unofficial holiday in honour of the occasion. I could (and did) visit more frequently: the store was literally located right across the street to my office.

My First Move to a Target Desert

After a few more years, I accepted a job transfer to Atlanta. The choice wasn’t easy; it meant giving up Target as Atlanta had no Targets at the time. I tried to make do with Richway—the discount division of famed local department store Rich’s. I think Rich’s attempted to copy Dayton’s strategy with Target. But Richly was no Target. It wasn’t even close. Like K-Mart, Richly was discount in every way imaginable. Apparently Atlantans didn’t love Richway all that much either and, when its parent company went into bankruptcy, Federated dumped Richway to the curb.

Target bought out all of the Richway leases, but not the store. After a going-out-of-business sale, Target moved in with the construction crews, rebuilt all of the stores as Targets, and opened a slew of them on a single day. Of course, I was there for the opening and renewed my special relationship.

Because I was an experienced Target shopper, I introduced all of my Atlanta friends to the store, who quickly took to the store.  My neighbours and I would occasionally make collective runs to Target.

In fact, introducing people to Target became an important part of my life over the next several years.Target opened in Baltimore, my home town, in the early 1990s. Unlike in Atlanta, Target had no chain of stores whose leases it could buy, so Target entered the market one store at a time. Within a few years, it became part of the local landscape. One day, my niece showed me something she bought. “You’ll be so proud of me, Uncle Saul,” she said.

“Did you buy it at Target?”

“Better. I bought it at Target on sale.”

A Target for Every Mood

I moved back to Minnesota in the late 1990s, this time to Minneapolis, the world headquarters of Target and where one never has to drive more than 15 minutes without encountering a Target. I visited as many as I could and found that, even though they share merchandise and a common look, each Target also had a personality. Some were Greatlands, with an expanded selection of merchandise.  Some were Super Target (just being tested as the time), and some were just plain old fashioned Targets. I shopped at enough different Targets that I noticed different Targets suited different moods of mine: my whimsical Target, my depression Target, my happy Target, and so on. It’s as if Target were a religion.

 

Target as Class Assignments

While in the Twin Cities, I made a long-term career change and became a professor. My first teaching position was at a university in St. Paul.  One of my students was a second-generation Target employee and, knowing of my interest in Target (because I found a way to work it into lectures), made sure that every one of her class projects was about the store.

About that time, Target launched its designer phase with its partnership with Michael Graves. Who knew such beautiful pieces (which ultimately proved impractical—his phone literally hurt my ear), could be sold at such ridiculously low prices? (I also owned the $350 Alessi tea kettle.)

But after being successfully recruited to a tenure track job meant I would be moving to Boston, a mecca for higher education but a Target desert. In fact, when I interviewed for the job, Target had no stores in the Boston area.

Apparently the retail gods knew Saul needs Target and, as I was preparing to move to Boston, Target bought the leases to several stores (I think they were once Ames) and planned a grand entrance into the market much like the one in Atlanta. Target open its first stores the weekend after I arrived to town (I could say that we coordinated schedules but that wouldn’t be true).

Once again, I was introducing people to Target. I even arranged a class field trip to Target to point out some of the design features of the store. Too bad the job didn’t work out as the class assignment (which taught communications students about the intricacies of designing a three-dimensional experience).

Another Target Desert

So I ended up moving to Montreal, which had Zellers. I sensed that Zellers had some sort of relationship with Target—they both used the same displays for greeting cards—but Zellers lacked the pizazz of Target. (It actually lacked any pizazz but it reminded me a lot of stores that had long left the USA, like Woolworth’s and McCrory’s).  Rumors frequently appeared in the news suggesting that Zellers would become Target but they did not become fact until 2011.

A Move Towards Complacency

By that time, though, Target USA had lost some of its pizazz. Its once-exclusive designers left for greener shelves: Michael Graves for JC Penney, Isaac Mizrahi for Claiborne, Philippe Starke to return to his regular business and designing condos in Montreal’s Griffintown. Target focused, instead, on a new category: groceries. But, other than great deals on  Chobani yogurt, the selection was ho-hum, the same ho-hum that seemed to become the norm throughout the store (save a few flash deals like the Lilly Pulitzer line in which the merchandise literally lasts just an hour or its pop-up like “The Shops,” which usually ran out of the good stuff quickly). Not only was Target losing the chic, it wasn’t all that cheap, either.  Walmart’s prices were often the same or a bit better (at last 2 cents, because Target ends its prices with $.99 and Walmart with $.97) and much of the merchandise overlapped except clothing.

Target’s increasing conventionality mirrored a similar trend in Dayton Hudson’s namesake department stores. By my second stint in Minnesota, Daytons’ lost enough of its cache with me that it became my only-if-they’re-having-a-decent-sale store. I remained a customer of Macy’s, which became my go-to department store during my years in Atlanta.

A couple of years after my second departure, Dayton-Hudson Corporation renamed itself Target Corporation.  Soon after, it dropped its iconic Dayton’s nameplate in favor of that of sister store, Marshall Fields. Analysts felt that the company was positioning the department stores for a sale. Indeed they were: The May Company bought Marshall Fields in 2004. A year later, May merged with Macy’s.

The sale left Target with just one store–Target–and flush with cash from the sale.

Onto Canada

This post-cool but cash-rich Target whose US sales had flattened despite an economy that would foster growth in a discount department store that came to Canada in 2013.

And they followed the same playbook that successfully worked in Atlanta and Boston: buy out the leases of a bunch of stores. Kick them out and fire all the employees. Rebuild the stores as Targets and hope for a profit from Day 1.

To be honest, I still maintained my loyalty to Target but mostly because we had transitioned from novel explorations to a comfortable, predictable relationship. The wide aisles at Target were easier to traverse than the crowded ones at Walmart. Target didn’t depress me the way that K-mart did. But I can’t say the merchandise excited me any more (except, perhaps, the Chobani yogurt).

But I was definitely excited about the entrance of Target to Canada. My old store was joining me in my new country. My Canadian friends and co-workers knew about my relationship to Target. But some weren’t all that enthusiastic about Target’s arrival in Canada. Some missed Zellers (perhaps misplaced sentimentality). Others didn’t want another American retailer to displace yet another Canadian retailer. They bashed Target in front of me, sometimes with pride. I told them that Target is sort of my other religion and I was going to report them to HR for religious persecution. It didn’t deter the comments.

A Crisis of Faith

And to be honest, I couldn’t argue with them that Target Canada sucked. If Target was my other religion, Target Canada fostered a crisis of faith. Although some aspects of the store were fine, most were not: starting with the shade of red chosen for Target. It was Zellers red, which is a bit darker than Target red. In other words, in trying to invoke Zellers, they failed to be Target.

The clothing selection seemed relatively similar but the housewares, pharmacy and health and beauty, and grocery sections were nothing like Target. The products significantly differed between those in the American stores and the ones in Canada. Heck, in Quebec, the pharmacies didn’t exist for half the lives of these stores; they didn’t open until 6 or 7 months after the rest of the store. Even the store brand products—Up and Up and Archer Farms—differed. They offered different products clearly manufactured by different suppliers and at different prices.

In those few instances were products matched, prices didn’t. And that made no sense at the time because the dollars were close to par. Starbuck’s Coffee: $11.99 in US stores, $14.99 in Canadian stores.

So, as much as my heart didn’t want to believe the problems with Target reported in the press and by my friends and co-workers, my mind couldn’t ignore them. And as much as my heart couldn’t believe the predictions that Target would pack up and return to the US when they first started to appear in the summer of 2014, the announcement in early 2015 that Target indeed planned to close up shop wasn’t totally shocking.

It hurt.

But what hurt more was the way that Target left Canada.

Dayton-Hudson, the company that launched Target, was a great community citizen. It offered good jobs, it supported a number of community causes (10% of earnings), and it paid its taxes. In fact, Dayton Hudson was so beloved in Minnesota, that when JC Penney tried to buy it in 1987, the governor called an emergency meeting of the state legislature to prevent the sale.

So when news surfaced within a week of Target Canada’s closing that one of the checks it wrote to a community organization bounced, I was disappointed. This isn’t the Dayton Hudson Corporation that I knew.

Although it was great that Target Canada ensured salaries of its staff for several months, it was still going to unleash 18,000 workers into softening job market. Although Target has a responsibility to its American shareholders, doesn’t it also have a responsibility to its workers and the Canadian communities that welcomed it? What about the Canadian suppliers who were also becoming dependent on Target?

As the months wore on, and questions arose about the appropriateness of the particular bankruptcy provision under which it filed, about Target’s leaving many vendors with unpaid bills, and about Target being difficult about releasing its store leases. In other words, not only had Target massively disappointed as a store, it also disappointed as a corporate citizen. Admittedly, the average American is unaware of Target’s tacky exit from Canada. But most most industry insiders and Canadians are.

More personally, I am aware. And I am disappointed.

And now?

Because I visit the US frequently, I still have opportunities to shop at Target.

I’ll admit it. I still do. I can’t stay away. If it’s any consolation, a part of me feels guilty about it.

But more of me wants to see Target USA recover. In addition to its debacle in Canada, the company suffered a huge data breach (which I didn’t discuss here) as well as years of increasingly dull merchandising.

On my last visit to Target USA, I saw the first signs of life in almost a decade. The housewares department has been re-designed and the display is the most imaginative thing I’ve seen in that store since the launch of the Michael Graves Collection. If the current president of Target risked long-term damage to the corporation by extricating itself from a poorly executed launch into Canada, at least the reason for doing so—to revitalize the US stores—seems to be sincere. And as hurt as I am about the way that Target left Canada, I was heartened to see its new housewares display.

I have also seen photos of a reimagined grocery section and that, too, looks encouraging.

I guess like any relationship, mine with Target had its good times and bad times. We’ve had more good times than bad, and the bad really disappointed me.  But I guess I’m in it for the long-haul with Target, Canadian misadventures and all.

I’m more cautious. I’m less impressed. I spend less. But I still visit. And I still buy.

New Year’s Resolutions 2016: Nine Reasons Why I’m Leaving Loblaws for Walmart

13 Jan

(Yes, you read that correctly.)

After I slipped and fell on one of an industrial black rug that had bunched up to become an accident waiting to happen and reacted by ranting like a raving lunatic, I realized that I had it with Loblaws.

Although the fall on the poorly maintained floor was the catalyst, the real issue is that, after a decade of increasing frustration with the chain, I realized that it’s time to change.

I’m switching to Walmart.

Here’s why:

  1. Walmart’s prices are better. At their worst, the prices at Walmart are the same as at Loblaws but often, Walmart has lower prices than Loblaws.
  2. Walmart has a larger selection. Although Loblaws has small housewares and clothing sections, and the merchandise is trendy and well priced, the variety is limited. In contrast, Walmart has a full selection of items in its stores.
  3. Loblaws doesn’t even carry all of its PC products in any given store. One way Loblaws is trying to differentiate itself is through its PC brand products. But it doesn’t carry the full line in any store. So we often have to go to 2 or 3 Loblaws to get all of the items that we want. Once again, an effort intended to create loyalty only adds to the nuisance factor.
  4. The checkout experience is quicker at Walmart (1). Loblaws tries to minimize the number of workers in a store, always understaffing them. This is most evident at checkout, where lines routinely are 3, 4, or 5 people long (at least, at the times I go) because only 1 or 2 of 10 checkout lanes are open.
  5. The checkout experience is quicker at Walmart (2). In addition to understaffing checkout lanes, Loblaws purposely re-engineered the checkout experience to force customers to bag their own groceries.

Check for yourself.

At Walmart, Metro, and IGA/Sobey’s, the checkout counter is designed so that, immediately after an item is scanned, it can go directly into a waiting bag. The system has not changed in these stores since the massive introduction of reusable bags.

However, when reusable bags were introduced in a big way at Loblaws in the later 2000s, the company reengineered its checkout counters so that items are placed on a counter to be bagged later.

This is inefficient and the cashiers routinely try to avoid doing it.

So while they wait, frustrated customers bag their own groceries.

If customers do not bag their own groceries, the majority of cashiers start a staring match with customers to see who’s going to break first and start bagging.

But bagging groceries is part of the value proposition that Loblaws offers, so they should be doing it with a smile, not a scowl.

Walmart smiles.

Look,I’m not under the false impression that Walmart is super quick. Lines can be long and, because of the breadth of the store offerings at Walmart, the typical basket tends to have more items. But I find that, even given this, Walmart offers a more efficient checkout experience.

  1. PC points—intended to foster loyalty—primarily fosters frustration. PC points looked like an interesting program. But too often, the scanner that’s supposed to read the cards “isn’t working” and the store, conveniently, cannot enter the card number on-site.

In other words, if you want your points, you have to make an extra effort to claim them.

The whole purpose of the PC points program is to help customers become more loyal to Loblaws. But when Loblaws’ approach to the program seems to suggest that they feel like they’re giving customers a gift and they want to make it as hard as possible for customers to claim it, it’s not a loyalty program; it’s a nuisance.

Once again, I recognize the problem is not unique to Loblaws. Its sister store, Shoppers Drug Mart/Pharmaprix occasionally has the same problem with its Optimum points card. In contrast, most American chains have a backup plan: register your card, provide a phone number, and the points can be credited on site. Loblaws does not seem aware of such an option.

  1. Before you start talking about Walmart’s unethical HR practices: consider the “ethics” of Loblaw’s weekend charity baggers. As mentioned earlier, the implied agreement between Loblaws and its customers is that it the Loblaws staff will bag groceries.

But as noted a moment ago, Loblaws has engineered its checkout lanes to make cashier bagging inefficient.

The solution: on weekends (the heavy traffic time), invite underage children representing a non-controversial charity—a sports team, a social action club—to do the bagging instead, and let customers pay a small donation for a service—over and above the fee they already pay.

It could be argued, however, that the charity baggers are actually doing work that Loblaws staff is supposed to be doing. This is essentially the same as an unpaid internship, in which students (young people like the charity baggers) do work that otherwise would have been paid.

Because the kids are performing work that otherwise would have been paid, it is considered—at the least—unethical—and possibly illegal.

And often, the kids doing the bagging are at or below the minimum age for employment.

On the one hand, I’m not trying to sound like a partisan crazy-person (though I admit, I probably do).

On the other hand, when one store understaffs itself and uses volunteer labor to perform work that once would have been paid, let’s not say it’s significantly more ethical than the store that actively resists unions. At least the latter store does a better job at maintaining proper staffing levels.

  1. Loblaws ignores customers comments. I have commented a few times on the situations raised here—and other, more specific instances—on the Loblaw’s website.

Admittedly, no one wants to respond to complaints.

But at least the complaints could be acknowledged: even airlines do that and even when they basically brush off the complaint. Loblaws’ doesn’t even have the minimal courtesy to brush off the complaint.

And as someone once observed, when a customer feels listened to, it makes the relationship so much better.

  1. Loblaws won’t even be Loblaws by the end of the year anyway. Loblaws has decided to rebrand all of its stores in Quebec as Provigo or Provigo Le Marche. Provigo LeMarche sports the new interiors of Loblaws piloted at the old Maple Leaf Gardens in Toronto. It’s admittedly a stunning store.

When Loblaws ran the two as separate stores, Provigo was more expensive. I’ve compared prices at Provigo LeMarche and, admittedly, they now seem to be the same as Loblaws. But slapping a new name and lowering prices while maintaining the same management and staff won’t change the service problems that are at the heart of my concerns.

  1. Why not IGA/Sobey’s or Metro? They’re lovely stores and frankly, I wish I could afford one of these on a regular basis. On the occasions when I do shop there, I notice that many items are higher than they would have been at Walmart or Loblaws. That’s why they’re not a contender for the business, especially in a year when food prices are expected to rise even further.

In other words, Walmart seems to more effectively deliver what it promises. Instead of trying to seduce customers with promises of quality products and service and delivering an understaffed store with spotty coverage of its own products like Loblaws, Walmart promises a no-nonsense experience and low prices. In my experience, Walmart has more consistently delivered on its promises than Loblaws.

So in this new year, instead of trying for one more year to suffer through an increasingly frustrating Loblaws, I’m going to do what many other Canadians and Americans have done: I’m shopping at Walmart.

 

Excellent Analysis of the Montreal Fashion Retail Environment

19 May

Starting with the visible signs–vacant storefronts in seemingly prime  Ste-Catherine street real estate that stay vacant for extended periods (even years)–Eva Friede provides an excellent analysis of the Montreal retail scene.

Some of Friede’s observations from the article, along with additional thoughts:

  • Although Ste-Catherine has some high-profile vacancies, vacancies could be a more serious problem on St-Denis, St-Laurent, and Laurier West.

My follow-up observations: (1) the arrival of some national and international retailers–like Urban Outfitters and MEC–on St-Denis and a stagnant economy could have caused the independents on St-Denis to leave. (2) Lingering effects of repairs to St-Laurent  problems that the Keystone Cops could have managed better than the city drove away shoppers to St-Laurent.  The a increasingly restrictive driving patterns and prohibitive parking rates are keeping them away.  (3) Dix30, Carrefour Laval, and even Galeries d’Anjou, where shoppers can find  are an increasing selection of top-of-the-line merchandise, are  threats to Laurier West.  Gordon Ramsey’s high profile restaurant that fizzled faster than a microwave can make tea–and that is boarded up and slightly graffitied now–doesn’t help matters.

  • Noting the increasing role of online commerce in retail, Friede reports that over 50 percent of the members of the Quebec retail federation lack websites.  A point of clarification would probably be helpful: Do that they lack websites entirely or merely e-commerce sites? The two differ.
  • Talking about  Jacob, the Canadian retailer that recently filed for bankruptcy, Friede reports two possible contributors. One is that the retailer failed to distinguish itself, a problem that has also caused a slump at Mexx (and, I might add, at Sears and, previously at The Bay).  Like many successful retailers (and organizations in general), the company tended to coast on its laurels rather than respond to an ever-volatile environment.

The other possible contributor is the arrival of other retailers.  They not only provided competition, but their deep pockets also resulted in mall managers moving Jacob to less desirable locations, on the belief that the new retailers would generate higher sales.  Although understandable on an economic level, the situation has a certain David and Goliath feel to it.  It also suggests the possibility that mall landlords have limited loyalty to their long-time tenants.

  • Speaking of economics and retailers, Friede suggests an interesting link between present conditions and recent economic history.

First, one of the key reasons that retailers have such interest in Canada is that Canadian retail weathered the economic crisis better than most other countries.  Friede provides some of the numbers.  Between 2008 and 2010 at the height of the crisis, retailers like Le Chateau and Reitmans performed had strong years.

In contrast, retailers like H&M and the Gap had particularly weak years.  I remember reading one article in Business Week at the time that questioned the solvency of H&M, which was building stores to gain market share even though it wasn’t generating much profit.  Similarly, the Gap was floundering, capping a string of unsuccessful seasons and musical chairs in its executive offices.  Flash forward to 2014.  H&M and Gap stocks have rebounded, while Le Chateau and Reitman’s are tanking.

Second, Canadian malls are more productive  than their overbuilt American cousins.  The typical mall in Canada generates 40 percent more sales per square foot; even the typical Quebec mall generates nearly 22 percent higher sales.

With some, like the New York Times, reporting that the Canadian middle class now has the same spending power as Americans, no wonder retailers find Canada attractive.

To see Friede’s complete article, click here.

More Shopping Tips: What Will Cost Less in 2014? More?

22 Jan

Is the price of gold going up or down in the coming year?

Coffee?

Milk?

Fast food?

Electronics, like the iMac, Surface, and smart watches?

To find out which prices are going down in 2014, check out this article at the Retail Insider.

And check out this article at DealNews.com for predictions of prices expected to rise during the year.

Shopping Advice: The Best and Worst Things to Buy in January

17 Jan

Should I buy a sofa this month?  How about that new washer dryer?  Or the new shirts for spring they’ve already placed in the store?

Retail Insider offers some advice on what to buy this month–and what not to buy.  Click here for the suggestions.