Target Canada: Turnaround or Exit?

As a regular shopper, you may already know of Target’s struggles entering the Canadian market. But you may have yet to see the retailer’s latest attempt at a hopeful turnaround – a YouTube video featuring various employees directly acknowledging the company’s recent problems.

The publishing of this video comes amidst a whirlwind of problems for the retailer since it officially opened its first stores in Canada in March 2013. Such problems included complaints of high prices and poor supply chain management, a massive data breach, creepy privacy issues, and even dismissal of the Target Canada President. As you can expect, followers on social media have been quick to attest to these grievances, and rightfully so. However, as unfortunate as each of these individual mishaps are, I believe there is a much bigger issue that Target needs to address, and it has to do with its brand strategy.

In the world of retail, players generally have four areas in which they can differentiate: price, product selection, convenience, and customer experience. Successful retailers will generally focus on one or two of these areas and do just enough in the other areas to stay afloat. The employees featured in the apology video are well aware of the retailer’s pricing and inventory issues, but these are all a result of a poorly executed brand promise – i.e. failure to focus on the appropriate area of differentiation.

Somewhere along the expansion process, Target got lost with its brand strategy as the retailer got thrown into cutthroat pricing wars with competitors such as Walmart and online giant Amazon, rather than staying true to its identity that proved successful in the US – its focus on the customer experience. By competing on both price and customer experience, Target failed to excel in either strategic component, primarily because retailers like Walmart and Amazon are the gold standard for discount pricing. The only way for Target to stand out is via delivery of an exceptional customer experience (for example, much like IKEA’s store setup for a family outing or Home Hardware’s motto of homeowners helping homeowners). But as a result of Target’s poor execution, Walmart’s motto “Save Money. Live Better.” became a much more compelling promise than Target’s “Expect More. Pay Less.” in Canada over the past fiscal year.

But even if we establish that Target should stick to providing a superior experience to its customers – or “guests” as the company likes to call them – the next question that needs to be answered is whether or not anyone cares for such an experience. That is, is there even a market for upscale retail customer experiences in Canada? Just because this strategy worked in the US does not mean it will translate north of the border for the retailer’s Canadian counterparts. And so far, it clearly hasn’t.

So ultimately, how effective will the apology video be in sparking a turnaround for Target Canada? Despite mixed feelings expressed on social media, I believe it is a good start for the company’s brand because, at the very least, it addresses the problem bluntly and directly. Such transparency is crucial for any brand revival and I would give credit to Target for being upfront and honest about its struggles; we have seen that transparency can work very well as it did with McDonald’s award-winning “Our Food. Your Questions.” campaign.

That being said, it is concerning that the video has yet to attract a significant number of views since it was published last week. The company will need to improve its digital strategy to make ground on its competitors, most of whom feature up-to-date product pricing on their websites and actively engage customers on social media.

While Target once again deserves credit for recognizing the problem, my gut tells me that there isn’t a market for upscale retail experiences in Canada because of the poor economic climate. When times are tough, people simply don’t care about experiences when it comes to seeking their basic household needs – they just want to save money.

What do you think will happen next for Target Canada? Will it make a significant turnaround? Or is an exit imminent for the struggling retailer?

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