Target recently announced their plans to pull operations from Canada and focus instead solely on their U.S. market. The decision was made after the CEO and business analysts took a close look at operations in Canada and could not find a way to be profitable until at least 2021. Currently, Target Canada has 17,600 employees at 133 stores. Target plans to withdraw completely from the market after only two years since launching.
Brian Cornell, CEO of Target, said, “Personally, this was a very difficult decision, but it was the right decision for our company. With the full support of Target Corp’s board of directors, we have determined that it is in the best interest of our business and our shareholders to exit the Canadian market and focus on driving growth and building further momentum in our U.S. business.”
Supply chain issues were cited as the main reason that Target was not profitable. However, there were many other factors, including competitive pricing and marketing issues. This shows how difficult it is for any business to expand into a new market, even a franchise as large as Target. It takes a lot of time to sort out supply chain issues, and there’s no doubt that Target could have done so in Canada. They were just not willing to put in the effort at this time because of profit losses and other business implications that the board of directors did not find advantageous. Target is reporting a loss of $5.4 billion in the Canadian market.
Target is making a profit in the U.S., but industry experts say that target’s failure in Canada is bad news for their long term health. In the future, Target may have a difficult time competing with Wal-Mart and other large retail stores. Sears is showing similar issues.