Target Canada: Lesson from Failure of International Entry

Abstract

Target Corporation, the second largest retailing company in the United States, is well known for their value to guests (customers), continuous innovation, and exceptional guest experience. With a desire of international expansion, Target announced their Foreign Direct Investment (FDI) plans for Target Canada in January 2011. In August 2012, headquarters opened in Mississauga with 124 store openings following throughout 2013. Two years later an unsuccessful attempt at entering the Canadian retail market resulted in a loss of over $5.4B. Target Canada rushed into its expansion into the Canadian foreign market and corporation was unable to repeat the successful US concept in Canada for several factors. Target’s scale was too large, the timeline was too aggressive, and the entrance method was attractive from a price perspective. As a consequence, Target was unable to efficiently manage the whole supply-chain, resulting in an unpleasant shopping experience for the customers. Finally, the incapability to differentiate itself from other retailers led to an unsuccessful attempt at gaining greater market share from the competition. Despite the fact that Target does not have a plan to enter back into Canada, this case offers suggestions for Target’s location strategy and plausible alternatives when revisiting potential re-entry into the international retail market. Recommendations are given based on what they learned from their first attempt at failed expansion.