There’s an old adage, “Don’t think of it as being outnumbered, think of it as unlimited target selection”. While the usage of the word “target” in the quotation itself struck my memory, I have yet to find anything more fitting to describe the ill-timed, somewhat predictable, still shocking news that Target will be abandoning its Canadian operations and returning south of the border from whence it came.
Certainly there was an abundance of competition, everything from Wal-Mart in the lower end market, to Hudson’s Bay at the higher end (and let’s not forget Sears, in the increasingly shrinking middle market). In the eyes of many, this seemed to be a positive for consumers, offering a greater variety of selection.
This is what Target hedged their bets on, one need not look any further than Niagara to see the extent of their capital investments. Two renovations to former Zellers’ locations (Seaway Mall/Pen Centre) each over 10 million dollar renovations and a third repurposing of Wal-Mart space in Niagara Falls. This is not the kind of infrastructure upgrades one makes when there is an expected early departure. In many ways though, while many people, news agencies included, have been caught off guard by the announcement, the signs were there in the details.
After all, there should have already been a little red flag flying when Target purchased or leased most of the former Zellers spaces. This was not an entirely different industry taking over vacant space, it was a similar retailer taking ‘old’ retail space and turning into ‘new’ retail space. Zellers went under because that piece of the market (the middle/lower market) is rapidly disappearing as consumers move to either high-end or low-end with no desire for the middle. In entering Canada, Target had to choose where it wanted to compete and it aimed low, for Wal-Mart territory.
At first it seemed to go well, their foray into the Canadian market was met with much fanfare, and despite delayed openings in Niagara there were still lineups waiting for the doors to open on the opening day. It’s terrifying that a corporation that owns 133 stores in Canada which collectively employ over 17,000 employees can, seemingly in a single day, announce its imminent withdrawal from the market.
Even in this day and age, with bombardments of advertising through a litany of different mediums, the power of the verbal recommendation reigns supreme. You heard it from your friends ‘there’s no one in Target, it’s empty’, or the comments on barren shelves, lack of inventory and the ripple effect had already begun. At the end of the day, higher customer service and Starbucks isn’t enough to lure people away from 1) expanded selection and 2) lower prices, in both of which Walmart seems to have cornered the market.
For now, the only bright side is that Target has willingly offered its employees 16 weeks of severance pay, a noble act given the losses the company has already suffered in the Canadian market. Niagara alone will lose over 400 jobs when the three locations close, adding to the Region’s already high unemployment rate (6.2 per cent is the official number, though it is much higher due to many unemployed persons no longer ‘actively’ looking for work). Sears has announced that they are willing to employ former Target employees and will also be hosting job fairs to attract applicants. That being said, if Sears’ current performance in the disappearing ‘middle-market’ is any indication, we may soon see another department store icon seal their sliding doors forever.