‘TARGET’ING THE END

In reference to the popular quote by Jim George,

“It is not how you start that is important, but how you finish”

This quote emphasizes the need to have a well-defined long-term strategy for any venture one intends to explore. Regardless of the nature of the venture, be it in family, business, personal deeds, it is important for one to explore a viable strategy that places such a venture at the least risk possible.

It is true that having a whole lot of money and reputation helps to allay certain concerns that one might tend to face but without a strategy for that money, it is as good as nothing. Even the best strategist can plan all they want, sometimes, it still comes down to luck. However, as an MBA student, I am forced to make my bed with the school of thought that says, “YOU MAKE YOUR OWN LUCK”.

The background above sheds light on a modern sad tale of an investment gone wrong. This tale (as I have decided to call it) ended in 2015. It is the tale of the Target Corporation and its venture into Canada. The new CEO of Target Corporation at the time – Brian Cornell – pondered what could have gone wrong and what decision to take to stem the losses being experienced with its Canadian division. The market was right, the entry had been aggressive, the numbers had probably been done but still, the losses never stopped. Target was no small company and its background in the US retail market shows just that.

The Target Corporation was first launched in 1902 by George D. Dayton in Minneapolis, Minnesota under the name Dayton Dry Goods Company (Dayton). The company quickly developed a brand for dependable merchandise, fair business practice and a generous spirit of giving. Dayton developed a chain of department stores with the vision to “combine the best of the fashion world with the best of the discount world.

A quality store with quality merchandise at a discount price and a discount supermarket.” These were the watchwords on which Target was built. Selling the best things at the cheapest rate possible. Shopping experiences would be fun, delightful, and welcoming to the entire family with wide aisles, easy-to-shop displays, fast checkout, and ample well-lit parking.

It is hard to see where things could go wrong using this model of business and by the end of 2014, the U.S. business hired around 347,000 employees and owned 1,793 retail outlets and a network of 40 distribution centres (DCs). Target was the second largest retail store in the US behind only the behemoth called Walmart. Even with the credit card data breach of 2013 and the subsequent loss of sales that accompanied the breach, Target still retained its position as the second-highest retailer in the US market.

Target had invested over US$4 billion in its Canadian operations as it rolled out 133 stores and three DCs, and took on 17,600 employees within the span of two years. The company had also purchased 220 store leases from the now-closed Canadian discounter – Zellers – for 1.8Bn CAD. The company had also decided not to continue with the Data Management System (DMS) it used in the US but chose to set us a totally new DMS. All these seemed quite good as Canadians anticipated its launch with cross border shopping on the rise.

However, by the end of its first year, Target Canada posted losses of 941Mn USD. A far cry from expectations. Things improved a little bit at Target Canada by the end of 2014 but the losses kept coming and a decision had to be made by Brian. Continue to operate in Canada or Close the Shop.

This Analysis of Business Problems Case helps one to realize that not all businesses are worth saving especially those that seem to do more harm than good overall. However, all through our analysis as a group (it was a group assignment), though we tried to see some light at the end of Target Canada’s long dark tunnel, it seemed the roof had caved in and the only way forward was back.