Tuesday, July 22, 2014

Target Canada Fails to Touch Down

The impending Canadian launch of fabled American retailers Nordstrom and Saks Fifth Avenue is eagerly anticipated by consumers, but the disastrous rollout of Target stores might make executives pause.   
It’s no secret that Target stores in Canada have struggled out of the gate. The Minnesota-based retailer posted a $1-billion loss in Canada last year. Customer satisfaction is abysmal, despite efforts to improve product availability and pricing.

Just this week, a retail analyst at Credit Suisse recommended executives shutter the Canadian operations entirely only 18 months after the stores opened. The company has balked at such a move and is reaffirming its commitment to the Canadian market, at least for now.

But Target is not the only American retailer to flounder.

In the wake of the 2008 recession, many American retailers turned their sights north, a market that was spared the worst of the economic downturn.

It seemed like a no-brainer: the countries are side by side, culturally similar and millions of Canadians shop in American chain stores each year.   

But it hasn’t been quite so simple for new entrants. In addition to Target, teen retailer Aeropostale, which began its aggressive expansion north of the border less than 10 years ago, is closing many of its 77 stores this year.

The American invasion continues, unabated, despite the mixed results of some of these retailers. Upscale department store chain Nordstrom will make its much anticipated debut in Calgary this fall. Stores at Ottawa’s Rideau Centre, Toronto’s Eaton Centre, Yorkdale and Sherway Gardens will follow in subsequent years.

But the Seattle-based retailer has had to amend its ambitious plans in the wake of Target’s troubled entry. It has pushed back the launch of its off-price division, Nordstrom Rack, from next year to 2017. The company said the complexity of the Canadian market was behind the delay.


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