Target Essay

845 words - 4 pages

Target: Missing the Bullseye in Canada Target Corp. was founded in 1902 as the Dayton Dry Goods Company and has now become the second largest discount retailer in the United States. Over the past decade, it has continuously discussed the possibility of an aggressive entry into Canada. In 2013, Target turned this discussion into a reality by acquiring the lease agreements of Zellers and rebranding the stores. The grand opening was met with immediate enthusiasm and was a highly publicized event. However, six months into Target’s official opening of its current 82 stores, the excitement quickly diminished and has instead translated into a dramatic $374M loss. More importantly, the company needs ...view middle of the document...

In addition to this, Target’s mass firing of Zellers employees and the extremely short amount of training that new employees received led to the compromising of a key competitive advantage: customer service. A poor pricing strategy contributed to Target Canada’s lack of success as well. It failed to consider the prices of established competitors, namely Walmart, and simply assumed that riding on the popularity of its brand name in the U.S. would be sufficient in bringing in large volumes of customers. For the most part, Canadian consumers are unaware of Target’s value proposition of being an “upscale discounter”, which essentially means that it offers premium quality products at affordable prices. Target failed to highlight this differentiating factor during its penetration of the Canadian retail market due to its oversight of consumer knowledge. Target should reconsider its pricing structure with Walmart as well as its U.S. counterparts in mind. The Canadian division has gross margins that are 2% higher than that of the U.S.; therefore, lowering prices is an acceptable risk, particularly while taking into account the higher volumes that could potentially be generated. During this period of increasing customer traffic following a price cut, the exclusive yet affordable designer products that Target offers should be emphasized through aggressive advertising in order to familiarize Canadian consumers with this distinguishing feature. On top of that, Canadian sales managers need to be trained on effective forecasting and inventory management, which is a necessary investment to ensure customer satisfaction. As sales start to increase and stabilize, prices could then be raised incrementally while remaining competitive. In...

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