Why Target Canada Failed (Hint: It Was Culture – and Management)

In case you didn’t hear about it, Target recently announced they’ll be ceasing operations in Canada.

What looked good on paper turned into a multi-year, multi-billion dollar loss. This begs the question – just why did Target Canada fail?

Look no further than the feedback from Target Canada employees (and customers). Employees make or break the customer experience. Unhappy employees equals unhappy customers. Unhappy customers equals declining profits.

“Unhappy with the Target Canada experience”

Back in May of 2014, when it was reported by Gawker that Target had lost nearly $1 billion, they received a dispatch from a management-level employee sharing frustrations as to what may have contributed to the failure. It said, in part:

I am a Canadian and I was hired in early 2012 to take on a leadership role for Target Canada stores. From the beginning, a lot of emphasis, time and energy was put into in my training. The primary focus of which, was acclimating to the Target “culture” – I spent months training in the U.S. at stores, District and Regional offices. I can say that I agree with the previous poster on the “passive aggressive” nature of Target’s performance management. The overly sincere “we’re here to HELP you” approach was a constant drain on the senses, as it was akin to swimming with smiling sharks. The real problems, however, became much clearer after we started opening stores.”

We’ve heard a lot about the Guest being unhappy with the Target Canada experience, but I can say with confidence that for MANY of us working there, the “Target experience” was not what we expected either. I can disseminate (from my perspective) why the company finds itself in the predicament it does today, and hopefully enlighten some readers on how ingrained and widespread the problems are.

International Assignees or IAs – these are key Team Members from the U.S. at various levels of leadership who came to Canada for a “limited timeline” under the guise of helping set up the stores and teams for success. Instead, we found that these folks were not guides or resources, as much as they were obstacles to progress. If it didn’t come from/work in the U.S. then it was not a discussion point. To come to a country as large, demographically and regionally different as Canada, and assume that the same “playbook” used in the U.S. would work in Canada was incredible.

The inability of the “IAs” to think and work beyond this led to us attempting to Xerox the U.S. store culture (for Team Members and Guests) instead of develop one that is tailored to Canadian tastes and attitudes. As things began to go downhill, the IAs were extremely pointed, and openly opined that the Canadian Team Members worked “differently & less hard” and overall “took less accountability” than they were used to in the U.S. That was an exact quote that came from my boss (an IA himself). Many of these IAs were scheduled to return to the U.S. this year… And most have been asked to remain. So much for the claim that the Canadian Target business be “run and operated by Canadians…(read more)”

What Target failed to consider

Now I could go into details about the poor operational model of Target Canada — processes, strategy, customer service practices, culture – though I think this employee (who per further research I’ve found is not alone in his sentiments) states it best in explaining the failure:

We’ve heard a lot about the Guest being unhappy with the Target Canada experience, but I can say with confidence that for MANY of us working there, the “Target experience” was not what we expected either.”

Target Canada failed at achieving success through people! If your employees, your human capital (which is by far any organizations’ biggest and most important asset particularly in an industry like retail), aren’t behind your mission, fully engaged, and delivering excellent customer service – how do you possibly expect to succeed?

Some things Target Canada failed to consider that may have led to employee and customer dissatisfaction:

1. When in Rome…

…do what the Romans do. Or in this case, the Canadians.

The employee who wrote Gawker said that the primary focus of the training was learning the “Target culture.” And “If it didn’t come from/work in the U.S. then it was not a discussion point.”

Well, what about the Canadian culture? You know, the culture that Target should have taken the time and effort to understand and appreciate prior to just opening their doors in their country? You can’t walk into another culture and expect to do business the same way you do elsewhere.

You have to take the time to understand your customers, their needs, wants, and preferred means of doing business (both operationally and personally.) Give thought to the problem your business solves for them and then learn how to adapt your strategy and processes to the new culture where you’re doing business. Oh, and if you can’t, or it proves to be too costly, then don’t set yourself up for failure.

2. If it ain’t broke…

…don’t fix it. OK, maybe you should fix some things — like in the case of Target Canada, the “… passive aggressive nature of Target’s performance management.”

Article Continues Below

When Target invaded Canada, they purchased over 100 stores from Zellers in 2011. Despite losing ground to Walmart Canada, Zellers didn’t technically go out of business until 2013.

There was a reason why they didn’t crumble to Walmart competition in the Canadian marketplace – something about the system still worked. They had happy people. When entering new territory, especially if you’re replacing stores (and brands), you need to understand what worked and why, so you know what to consider replicating and what to consider replacing.

3. Business (NOT) as usual

I know on many levels Canada feels like U.S. North to some people, but it actually is in fact it’s own country. They even have their own money. Some even speak another language.

In the words of a Target Canada employee: “To come to a country as large, demographically and regionally different as Canada, and assume that the same “playbook” used in the U.S. would work in Canada, was incredible.”

Copying the same strategy to another demographic doesn’t always work. Processes are different (Target Canada faced inventory and pricing issues, and that was a huge factor in their demise) and people are different. To succeed you need to study the region in which you’re considering doing business so you understand how – and why – they do business the way they do. You can’t just assume that if it worked here it will work there.

Moral of the story: If you’re thinking of growing your business into a new territory, be sure you understand the culture, the needs and wants of your employees and customers, and implement processes to deliver on those – without going broke!

Achieving success through people is key to why businesses grow or fail.

Scott Span, MSOD, is CEO & Lead Consultant of Tolero Solutions, an Organization Improvement & Strategy firm. He helps clients in achieving success through people, creating organizations that are more responsive, productive and profitable -- organizations where people enjoy working and customers enjoy doing business. 

Topics

1 Comment on “Why Target Canada Failed (Hint: It Was Culture – and Management)

  1. Great article Scott! I can’t believe an organization with as many resources as Target would not have known how to do this. McDonald’s comes to mind as an organization that, while really struggling now, at some point understood this (Vegan burgers in India, different fish options in Japan, etc.). Thanks, this was a fun read. – Jason

Leave a Comment

Your email address will not be published. Required fields are marked *