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Dear Target: It’s Not Me, It’s You.

640px-TargetHollywoodCAThis blog post is about two things that interest me: Target and the nation of Canada.

Target of course is the Minneapolis-based discount retailer.  The chain had a reputation for being a place that made discount stores chic and exciting.  It was the hometown store, the local kid that made good.  Going to Walmart was a chore, but going to Target was hip and cool.

So, when Target announced in 2011 that it was going to open stores in the Great White North of Canada, I was excited.  The cool and hip retailer was going to the place that I’ve had a fasination with since I was a kid.  Where I grew up in Michigan was about an hour in two directions to Canada.  So, you could easily watch the local Canadian Broadcasting Corporation TV station from Windsor, Ontario.  I would make it a point to watch their version of the evening news to learn about the issues my neighbors to the north were facing.  I guess that makes me a bit of a canadaphile.

As we all know now, Target’s entry into Canada has been a disaster.  After only two years Target is pulling the plug on it’s Canadian stores, shutting them all down and throwing some 17,000 people out of work.

A lot of experts think Target did right in shutting down a losing operation, especially one that probably wouldn’t be profitable for another six years.

I think it’s a dumb idea for reasons I will explain.  But the whole fiasco has caused me to re-evaluate my support of the bullseye.  The debacle uncovered some of the problems with the retailer problems that the Candadian closure and the sacking of thousands at the Minneapolis headquarters will not solve because the company is focused on profits instead of something more basic: customer service.

There are a lot of reasons batted back and forth about why Target didn’t work in Canada.  We know all the stories about empty store shelves and prices that were more expensive than competitors.  But at the heart of it all, is the fact that Target stopped focusing on making sure the customer (or guest in Target-speak) had a good experience.  I think the retailer had a certain arrogance that they would win over the Canadians with being Target.

Target was in many ways copying what another American retailer did to gain a foothold in Canada: WalMart.  The Arkansas-based retailer entered Canada in 1994 when it bought over 100 Woolco locations just as Target bought over 100 Zellers locations.  But that is where the similarities end.  This is what the Minneapolis Star Tribune notes about Walmart’s entry:

 

Wal-Mart’s jump into Canada came back in the early 1990s, well after Wal-Mart had emerged from its rural roots to become a retail juggernaut. One of the retailers then on its way out of business was Woolco, the discounter started by the once-dominant retailer F.W. Woolworth Co.

The American Woolco stores were finished by the early 1980s, but the chain was able to hang on longer in Canada. As Woolco up there was nearing its end, the New York Times reported that all the rumors in the financial markets in Canada seemed to point to just two likely buyers, both looking to acquire the chain and quickly reopen its stores as their own. One was Wal-Mart and the other was Dayton Hudson Corp. of Minneapolis, as Target was known back when “Target” meant a division.

It was Wal-Mart that made the deal, buying the Woolco stores for about $350 million. Unlike what Target did with the sites it acquired from another fading discounter, Zellers, nearly 20 years later, Wal-Mart from the date of its announcement in 1994 promised to hire everybody, from the Woolco president on down.

Wal-Mart then let the Canadians run the show. Wal-Mart made the chain part of its international division, acknowledging that Canada is not just some really big state north of Minnesota.

Wal-Mart also didn’t close the Woolco stores to renovate them into new Wal-Mart stores, keeping them open through the whole conversion.

That’s a messy task, a little like repainting a car as it rolls down the street, but Wal-Mart didn’t want to let the Woolco customers establish new shopping habits. A customer who came to a store every month to get prescriptions filled at the pharmacy might not come back if it closed even for a short time.

“The piece they really got right was that they put their focus on operations first,” Sherk said, referring to things like keeping the shelves stocked. “Retail is attention to detail. Wal-Mart can do that very well, and they did that in Canada.” (Emphasis mine)

The writer doesn’t want to say that Target didn’t pay attention to detail, but that’s exactly what happened with Target. Target didn’t launch as a Canadian operation, but as an extension of their HQ in Minneapolis. Or as article in Huffington Post Canada noted, Target saw Canada not as nation with its own peculiarities, but as the 51st State. Irony of ironies, Walmart, the chain that we like to think is the Ugly American is the one that got it right.

Part of the problem with Target as a whole is that it doesn’t pay attention to the details. I’ve started to notice this over the years of shopping at the retailer. For example, the infamous problem in Canada of empty shelves is not unheard of in the States. Now, I usually shop on Sunday evenings so you might expect empty shelves and that has happened as I walked down the grocery isle. But the thing is, I’ve gone to other retailers on Sunday evenings and their shelves are well-stocked. Why is that a problem for Target. Related to that is that if you go grocery shopping you will realize when you get to the checkout that there are certain items that aren’t available at the bullseye. So, in essence, you have to go to another store to get something that isn’t at Target.

Then there was the time that Target pharmacy messed up a perscription.  For the most part the guys at the pharmacy are great, but no one is perfect and they really messed up.  I kept waiting for a certain drug to be refilled and for them to tell me when it was ready.  I came by a few times during the month and never recieved the drug.  I finally came and asked for the refill.  Turns out it had been filled and sat in the bin for several days before it was returned.  Instead of filling the prescription that they messed up, I was told that they couldn’t do that.  They could give me a few tablets for a few days and a week or so I could ask for the refill.  Instead of helping the customer and trying to fix a mistake they made, I was made to feel like it was my fault.  This is poor customer service and I’m still upset about it and this took place almost a year ago.

Target has a problem on both sides of the border in not focusing on details.  I think people think about big ideas and tend to not look into the nitty gritty, the things that can make or break of retailer.  The problem in Canada isn’t that they opened too many stores at once.  It’s that they didn’t really take the time to think about how to serve the Canadian customer.  They didn’t do the most basic rule of business: know who you are selling to.

Target is trying to restructure which mean the loss of 1700 positions in Minneapolis.  It will also mean trying to get the reputation for cheap chic back.  They seem to believe that mannequins will turn the company around.  And organic food (umm, Walmart has been focusing on this for nearly a decade, guys).  And not stocking winter items in Florida.  As you can tell, I don’t think this is going to make a difference.  What might make some difference is the opening of smaller stores, like Target Express that opened in Minneapolis last year and St. Paul this year.  But even that might not be enough.  One of the reasons Target went into Canada was because they were tapped out in the States.

(A Wall Street Journal article from 2014 notes that prior forays into fresher food didn’t do so well.)

If I were the CEO of Target, I would have kept the Canadian stores open. Well, most of them.  Close a chunk and then work on the remaining ones.  Create a Canadian division with their own headquarters in some Canadian city and staffed by…wait for it…Canadians.  See the failure as a chance to turn things around and offer better customer service.  Beat the forecasts that said that Canada wouldn’t make a profit until 2021.  Focus on the details.

Target is where it is because it hasn’t focused on the details.  They are a long way from their founder’s beliefs when George Dayton started the company a century ago:

The company now known as Target was founded in the early 1900s by a New Yorker named George Draper Dayton, who carefully conducted market research before forming the Dayton Dry Goods Company and selecting a location that fit his strategy. Dayton had a reputation for solid stewardship and he ensured his company was dependable when it came to merchandise. He was also big on inventory management. When a freight-handlers strike in 1920 threatened the company, for example, Dayton immediately moved to prevent empty shelves from dissatisfying customers by deploying airplanes to transport goods across the country, which was revolutionary at the time. Loaded with inventory, the planes were paraded through the streets of Minneapolis, demonstrating the lengths to which the store was willing to go to please its customers.

After leadership passed to other generations, the company remained meticulous about planning. This didn’t change in the 1960s, when management decided to introduce a new kind of mass-market discount store for “value-oriented shoppers seeking a higher-quality experience.” Indeed, as the company set out to combine department store features (fashion, quality and service) with a discounter business model, the transition that was widely seen as risky was made less risky via slow, careful planning.

When Target initially launched, it started with a handful of stores around Minnesota. And management made sure the new business made a good first impression by paying attention to details that made the experience “fun, delightful and welcoming.” As newspapers noted at the time, the store had wide aisles, easy-to-shop displays, fast checkouts and plenty of convenient parking. The Target name and logo were also carefully selected to send a message. “As a marksman’s goal is to hit the center bulls-eye, the new store would do much the same in terms of retail goods, services, commitment to the community, price, value and overall experience,” notes the company history.

It’s way past time for Target to be on target again.  Mannequins aren’t going to save Target.  George Dayton knew customer service was paramount.  It would be nice if the current leadership remembered that.

Update: An anonymous employee at Target headquarters in Minneapolis wrote to Gawker last year about life inside the corporate office.  It was not pretty:

Target HQ is in bad shape and in desperate need of help, direction and vision, starting from the top down. [Former CEO] Greg Steinhafel getting fired was a good step, along with the CIO being fired a few months ago, but it’s not enough. The entire executive team with the exception of the CMO Jeff Jones needs to go. Why? Because everyone was homegrown and “Targetized” and has no concept of how to run a 21st century business. They still think it’s 1996 and you can keep throwing up Target stores and suburban moms will love them. They pay lip service to how retail is evolving but it when it comes to actually making good decisions, they do horribly. When I started, they were so excited about getting “Buy online, pick up in store” as if that was some new invention. How many other stores have that and do it better than Target? Regular customers don’t even know about it, because people hate Target’s website. They’ve tried starting a Netflix like service, or a subscription service, but no one knows about them and they are just copycats of what other businesses are doing. Target has no original ideas, they are just reacting to what other companies are doing and jumping the bandwagon. They have a culture that makes decision via consensus, so it takes FOREVER to make a decision and implement even the smallest change. That keeps them from being able to make the necessary changes, and they won’t ever get there without a big change in leadership and a true vision beyond “keep the doors open”.

 

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45 thoughts on “Dear Target: It’s Not Me, It’s You.

  1. Our experiences with Target, like yours, were a lot better in years past than in years recent. I don’t know what happened. It’s like they’re constantly understocked of things that, you’d think, no decent store would ever run out of. Like the good kind of socks. I like to buy the socks that are nice and thick and suitable for wearing under a pair of Doc Martens all day. And they had only one pack the last time I was there. ONE PACK.

    This is madness.

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    • Target did indeed used to be a more chic and pleasant place to go. Now, at least in my part of the world, it feels pretty much exactly like Wal-Mart. Except the food costs more. Soap and grooming supplies are pretty much the same. The garden and outdoor centers all closed.

      The only reason to continue going to Target these days is fewer people shopping at the times we’re likely to be out, so it’s easier to navigate and check out than at Wally World.

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    • Hmm…I didn’t realize this was a U.S.-wide phenomenon. I was in there a month or two ago and thought it really strange that they seemed not to have completed the post-Xmas restock yet (January is often a bare-shelf month, but February?)

      I wonder how hard Amazon is eating their lunch. I go to Target, and most everywhere retail-wise (except the home improvement store and the grocery store), a lot less frequently than I used to.

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  2. Well, you’re absolutely right about attention to detail, but I do think they also opened too many stores at once. It’s kinda bizarre how they did it here- they knew that Canadians love to cross the border and shop at American stores, so they opened 133 stores pretty much in a rush without having their supply chains in place and then they gave them less than two years to work before pulling the plug. It brings new meaning to the saying “go big or go home”. Target seemed to ask, “Why can’t we do both?”

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  3. I still like Target. I don’t go to Wal-Mart, but that’s probably largely just because I don’t know where things are there. Also, the aisles feel cramped to me.

    The thing I find weird here in St. Paul is how many things are cheaper at Target than at Cub, both local companies. But they are right next to each other by me, with a Wal-Mart right in the same complex, so I usually just go to whichever has what I want cheaper (except Wal-Mart, I just haven’t taken the time to comparison shop there), or just has what I want. Often I go to both on a trip.

    I know Target screwed the pooch in Canada, but until that starts clearly affecting my shopping experience, I don’t really care much. Maybe it has, but I’m not too aware of it yet.

    I have noticed them being out of stock with some things. I guess I don’t think much of it when it happens. Also, customer service remains good. Recently there were running a special on 24-packs of soda but there weren’t any. So I asked for 2 12-packs for the price they were selling the 24s for; they did it. No way that’s happening at Cub.

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    • I’d love someone to tell me why Cub sucks so much more than Rainbow did. The uptown Rainbow went Cub and our grocery bill increased by about 25% while our quantity and quality stayed the same or went down. Also Cub’s only rewards are discount gas at Holidays. Rainbow rewards actually helped you buy stuff – at Rainbow.

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  4. They screwed up the Canadian move. Now they are scrapping it. If they come back it’ll be a restart. They are cutting their losses and pulling out. To stay would have meant that they’d continue to bleed while still fixing the problem. I’m sure they are having problems in the us as well, so it makes sense to cut and run.

    The staff reductions are a reaction to the large write offs they will be taking. Hopefully they’ll learn from this and work to get back to the standards they used to have. Otherwise someone else with become the new “tar jey”

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    • The thing that gets me is that this is not a new thing. I mean, MBA programs all have classes filled with tales like this, about how to do a move into another market/country right/wrong.

      One would think some of the people in charge of the Canada opening would have gone to one of those MBA schools and read case studies on this kind of thing. Had a clue & all that.

      Once again, the smartest guys in the room…

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      • Yeah, you’d think. But I can’t tell you how many business decisions I’ve had to implement or been effected by them where the operative mode was “just go do it, we don’t have time to think about it.”.

        Too many.

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      • I think part of the issue here is that Target has always thought of itself as “not WalMart,” that, and the parachioal nature of Minnesota. Don’t get me wrong, I love living here, but more often than not there is a kind of closed-off sort of thinking that can’t see past their own viewpoint.

        Just because you have a degree don’t mean your’e smart.

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    • Yeah, but it seems a waste to just give up after two years. The whole Canada move just seemed to half-assed. I know sometimes businesses don’t translate well in another country, but this was all Target’s problem. I guess it bugs me because I feel a brand I liked disappointed Canadians who expected more.

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  5. I can’t comment on the business decisions at the higher levels or how it operated in Canada, but speaking as a customer, it seems to have gone downhill in some respects. The weird thing is, I have a hard time pointing to specifics. It used to be fun to go there, and now it’s not. It does seem, as in Jaybird’s example, not to have stuff I’d expect it to. (#firstworldproblems, of course.)

    I do have a speculation/observation about the pharmacy screw up, though. They bombed the customer service, especially in not notifying you when it was done and in not knowing they had filled the prescription when you came to pick it up. I suspect, however, that the error once committed might not be something they could fix right away, because of whatever laws regulate pharmacies. So them not being able to help you right away after their initial screw up might have been a result of regulation. Which would be one reason why their initial screw up is so bad. (Or not. I’m not a pharmacist and don’t know what rules they have to follow.)

    I still like Target better than Walmart, however. That might be a regional thing. In Chicago, I’ve been to only one Walmart, and it seems almost like a Walgreens or CVS but with a small selection of groceries. And I already live within one mile to 3 Walgreens and 2 CVS’s. And those companies, at least in Chicago, are starting to experiment with offering groceries. (Again, #firstworldproblems)

    Finally, nice to see you around these parts, Dennis. I like reading your posts!

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  6. Tangential, but I was telling my wife that Walmart has really upgraded their house brands. In addition to the really good salsa I mentioned, their soft drinks are better than any house brand this side of Kroger (and some are even better than Big K). They also do really good rotisserie chickens compared to other places (less dry).

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      • I… don’t know that they do. Their fruit drinks are about as good as anything this side of Hawaiian Punch, though, and their Mountain Dew variant is second only to Big K Citrus Drop (Mountain Dew variants are very hard to get right).

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    • Speaking of Kroger, their local grocery chain here are the only large stores I go to where the entire staff asks if they can help you find something. The people stocking shelves ask. The person behind the butcher counter asks, and knows where the raisins are if that’s what you need instead of meat. There seem to be some number of people just wondering around, all of whom ask. This seems to be a fairly recent development, like in the last year or so.

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  7. Related to that is that if you go grocery shopping you will realize when you get to the checkout that there are certain items that aren’t available at the bullseye.

    By “certain items,” do you mean all of them? I’ve been to Target as recently as 2013 and never seen groceries. Is that a new thing?

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  8. Target has earned a lot of loyalty from me due to two innovations:

    1) The Shopping Cart Whose Four Wheels Always Touch The Ground.
    2) The Hand Basket Whose Handle Runs Front to Back.

    Number 2 is one of those inventions that is so obvious in retrospect that one wonders why it took decades for somebody to figure it out. You never see somebody carrying a suitcase or bowling ball back with a handle that runs perpendicular to the direction of travel and turns your wrist the wrong way. Why grocery baskets were the one exception to this rule for so long is baffling to me now, even though I didn’t think twice about it until Target fixed the problem.

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  9. I’ve never lived in an area with Wal-Marts in a reasonable distance*. I’ve lived in areas with Targets though.

    I don’t do much regular shopping there. They are a place I go to for stuff like toothpaste, deodorant, mouth wash, etc. They are good for that. They have never run out of products I liked.

    Unsurprisingly, I don’t buy clothing at Target.

    *The nearest Wal-Marts are in the East Bay and require a car. I can walk to a Target in about 18 minutes from my apartment.

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      • A $300 shirt at Target? Damn.

        I’m wearing a t-shirt from Target right now. If I remember correctly, it cost $9.99. It’s purple. It looks like pretty much any purple t-shirt of any price. Except the one with diamonds sewn in. That one looks different.

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      • Back when I was more carefree with my money, I bought almost all of my clothes at Target, with each major item (shirt, pants) ranging from $10 to $20. Now I get such items of comparable quality at thrift stores for at least half the price, and usually 1/4 the price. (However, if I get a job that has a stricter dress code, then I might have to go back to shopping at Target.)

        I still buy underwear and socks at Target, though. I haven’t drunk the thrift-store Kool-aid for those items yet.

        /t.m.i.

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    • I haven’t spent much time at Target since we used to buy diapers for the kids, who are now in college. I’m outing myself as a suburbanite, but most of my shopping is at Safeway, Trader Joe’s, or Costco, with the occasional trek to Home Depot, where I just bought a $30 ceiling light that would have been about $100 at the fancy lighting store.

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  10. Frankly i never understood what folks found so chic about Target. It mostly seemed to be that it wasnt that boogey man Wal-Mart.

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    • I’ve been in the stores. They were clean, well organized, with plenty of stock. The staff was pleasant and helpful. Sadly, they didn’t carry certain things that wal mart did, but I knew I could get lot’s of domestics there and the bath mats and stuff like that were nicer than wal mart and not as pricey as Bed Bath and Beyond.

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      • Same perception here. I prefer Target to WalMart because it’s easier for me to see the product when it’s in its packaging on the shelves instead of opened up and strewn all over the floor. The small additional savings offered by WalMart’s scrimping in those areas just isn’t worth it most of the time.

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    • The Evil Wal-Mart aspect is part of it (and I write this as a former Wal-Mart employee: it was a hell hole to work in back in the 1990s; nothing I have heard suggests it has improved since). But this isn’t all of it. Just the fact that the aisles are filled with crap. Wal Mart uses the aisle as merchandising space. Target uses it as a space for the customers to use while getting to the merchandise. It so happens I went to the local Wal-Mart just yesterday. It has my favored brand of bath soap in a multi-pack, while it is hard to find even in single bars elsewhere, so there I went, and made a shopping trip of it. Navigating the store was a frustrating experience. The main aisles are blocked with pallets of crap. The side aisles are just wide enough for two carts, which is to say that they are too narrow if one cart isn’t perfectly straight, or if they put an additional display in the aisle, which they frequently do.

      Beyond this, Wal-Mart’s men’s clothing has always been terrible. This was true even back in the 1990s. The one time I made an emergency purchase of a dress shirt, it had loose threads and was fraying immediately. Target, by contrast, is a reasonable place to buy decently made clothing.

      Finally, I don’t trust brands at Wal-Mart. I’m not talking about Wal-Mart brands. I’m talking about name brands, sold at Wal-Mart. They have a history of demanding ever-lower wholesale prices from their suppliers, with the result that the suppliers manufacture shoddy versions just for Wal-Mart. They are selling cheap knock-offs, even if the label is legit. I recently bought a new computer. Wal-Mart had a name brand with the specs and price I was looking for. I thought long and hard about it, then drove forty-five minutes to a more reputable retailer, where I ended up buying the name brand for the same specs and price. Was I being unnecessarily paranoid? Perhaps. But perhaps not.

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