Target, America’s second largest discount retailers have a simple plan which is to conquer the Canadian market. The Minnesota-based company is quite successful in the U.S, making an impressive US$68 billion in sales in 2013. It is only logical to expand their success and branch out internationally. Target prides themselves on their amazing branding strategies, they boast about having better products than their competitors, better shopping experiences, and they also claim to offer better prices than your local department store. Although Target’s main competitor is Wal-Mart, they have branded themselves in a way which sets them apart within the discount-retailer world; Target aims to be known as a high-end discount retailer, the average shopper has a median household income of more than US$64,000 which is substantially above the average American household, which is approximately US$50,000. Target promises to offer consumers higher quality goods at a low cost. In retrospect, Target’s aim is to attract consumers who love a great bargain but would not be caught shopping in Wal-Mart. The corporation is incredibly successful and the reason behind their success derives from their marketing and branding tactics. Their aim is not to have the cheapest of goods; instead the focus is on lowering prices based on scale and efficiencies. They have been successful in creating a niche for themselves amongst their competitors; Target’s reputation is that of a significantly higher-end discount-retailer. As a result, consumers refer to Target as “Tar-jhay”, signifying some sort of bourgeoisie. However, Target remains affordable enough for university students. The corporation announced in early 2011 that they purchased the rights to little over 200 Zellers leases for $1.8 billion. They spent about $1 billion in renovations and in the second quarter of 2012 they spent an additional US$47 million on expenses solely in the Canadian market. That took a whopping 9% bite out of their earnings-per-share during the last quarter of 2012. Target aims to draw in brand-conscious middle-class Canadians; however Canadians may have a different perspective on what Target has to offer. In 2011, a survey was done by “Satov Consultants” on Canadian shoppers and they determined that Canadians associated Target with low prices and value prices. Canadians believe that the corporation would compete with Wal-Mart to provide consumers with lower prices, which is completely off Target’s “bulls-eye”. Since Canadians are familiar with U.S store prices, they will be anticipating U.S pricing. Target will have to deliver on that end to impress the Canadian market.
Case Analysis “Target Update”
It has only been two short years and Target has decided to pull the plug on all of its Canadian stores. They will be closing all 133 stores across Canada, putting 17,600 employees out of work. This decision will greatly impact smaller cities such as Brandon, Manitoba, because this location employs over 100 people and it is also the primary retailer of the city’s main shopping center. In a small city like Brandon, where the population is estimated to be around 150,000, that loss of employment can have damaging effects on the city’s local economy. The main question still persists; where did Target go wrong? The corporation did not take the time to do its due diligence on the Canadian market. They simply copied the American culture and brought it over to Canada, instead of creating one tailored to Canadian tastes and attitudes. Canadians cross the border to shop at the U.S locations because they can find amazing bargains. Thus, the company wanted to cash in on the influx of Canadian shoppers. They strongly believed there was a niche for their stores in the Canadian market. A primary rule in business is supply and demand and once the stores opened, Target could not supply their customers with basic necessities, such as milk and eggs. Target’s