Target leaves Canada

Target is now officially closed across Canada, bringing an end to perhaps the biggest blunder in Canadian retail history. After the January announcement of plans to shut down in Canada, Target stores entered liquidation in February using signage that was identical to what Zellers used in most of the same spaces, just over 2 years ago. In a weird twist of fate, Zellers has officially outlasted its “successor”, as two Zellers stores remain open in Ontario as outlets for the Hudson’s Bay Company.

I was to sad see Zellers go, as it was a store that was always in the community where I grew up. I also regret to see Target leaving Canada since it is unlikely that another retailer will take its place. Walmart has announced they will take over some locations, and GoodLife Fitness will also take some. The rest will go to, well, who knows. It costs a lot of money to divide larger spaces into smaller ones (walls, HVAC, etc.), so some smaller malls may end demolishing their vacant spaces to save taxes.

Target was very optimistic, and as it turns out, unprepared, when expanding into Canada. They knew there would be unique challenges – speaking a different language in Quebec and New Brunswick, for starters, but it seems they had no idea how to manage such a large brand new footprint in a different country. They took on 130 new stores in all, excluding dozens of rejected Zellers locations that transitioned to other uses. Having said that, Hudson’s Bay Company wanted to unload the entire Zellers footprint of locations quickly. Target likely knew that all locations it didn’t take would possibly become occupied by a competitor, such as Walmart.

Another factor in Target Canada’s demise was the fact they didn’t actually take over the store operations of Zellers. They bought only the leases, and established everything from scratch, including a distribution network. It is widely believed this move was designed to avoid having unionized employees, but in the end, the move didn’t work out well at all. Canada is often the first stop for American companies expanding internationally, and Target’s spectacular failure in Canada firmly confines them to the United States, where things aren’t getting any easier.

The closure of both Zellers, followed by Target, is a sad story overall.

 

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