The newly appointed Chief Executive Officer, Target Corporation, Brian Cornell, was faced with a dilemma. Should Target Corp. remain in Canada? Considering the company was faced with a severe loss of over $1.36 billion due to operational challenges, poor sales, and intensifying competition, CEO Brian needed to make a crucial decision that could make or mar the corporation.
Formerly known as Dayton Dry Consumer goods, established in 1902, it was a quality store aimed at providing quality goods and services at discounted prices, and providing consumer satisfaction.
Target corporation established a brand reputation, with the vision of “Expect More, Pay Less”, and they continued to collaborate, and produce daily essentials, quality merchandise, including exclusive fashion brands, and a series of assorted goods for their customers at discounted prices. In the 1960s, Target was one of the United States largest discount stores with 75 stores made available for patronage.
At the end of 2014, Target US hired 347,00 employees and owned 1,793 retail outlets and a network of 40 distribution centers. “Quite impressive”. It aimed at harnessing its strong supply chain and infrastructure and delivering a superior shopping experience for its customers.
In 2013, Target was the second largest retail store in the United States, as it generated a revenue of $72.5 billion, earnings before interest and tax of $4.2 billion, and generated $1.97 billion in net earnings, with a market share increase from 0.1% to 2.5% in the same year.
While its Canada business struggled, Target US was also faced with challenges.
A highly competitive e-commerce environment, Big-box retailers trend towards small-format stores, and a data breach that involved over 70 million of their clients’ payment card data, and contact information stolen from their database. They incurred expenses of $148 million, while sales in the third quarter of 2014 lagged by 3.8%.
2013 Target.com e-commerce had a market share of 2.1%, while its competitor, Walmart, had a market share of 9.2%. The e-commerce industry grew significantly and online shoppers were projected to increase from 191 million in 2013 to 215 million subscribers by 2018.
Suburban stores struggled to move big-box retailers to small store formats. On the verge to revitalize its “cheap chic” brand, Target launched City Targets in some cities in the United States, making up roughly 40% the size of the average Target stores. They focused on Urban office workers, residents, and students with unique styles. They provided fresh food, apartment essentials, and fashion exclusive brands. City Target dwellers compose 13% of Target’s shoppers and shop 2.3 times per month.
Highly anticipated by customers and other similar competition, Target launched in Canada. An investment of $4 billion was made to Target’s Canadian operations. They rolled out 133 stores, 3 distribution centers, and hired 17,600 employees within 2 years. In 2011, Target Corp. announced the purchase of 220 store leases from Zeller for $1.8 billion and invested 10-11 million to renovate each store. Target launched 125 stores across the country in cycles of 24 stores every two months and 3 distribution centers. Target Corp. expected revenue of $1 billion within the first year and annual revenue of $6 billion by 2017.