Target recently opened three new stores as part of their continued investments in Canadian expansion. The store openings, located in Ottawa, Mississauga, and Winnipeg, bring the total number of Target Canada locations to 133, or roughly 7 percent the number of US locations. These are the final locations to open in 2014, marking the end of an aggressive campaign that began with 124 stores opening in 2013.
Target’s big push into Canada hasn’t been easy, though. The company lost nearly $1 billion on Canadian operations last year and continues to lose money this year. In a recent press release, Mark Schindele, president of Target Canada, notes, “We’ve been listening to our guests and taking a hard look at where we need to improve. We’ve uncovered the root cause of some of our challenges and are focused on three main areas: improving in-stocks, sharpening our pricing strategy, and enhancing our merchandise assortment.”
Out-of-stocks can be a killer in retail. Every failure to provide an item in stock when a customer is present leads that customer to a competitor, resulting in a direct loss of revenue and possibly a long-term loss of that customer. Target Canada has been suffering from a large number of out-of-stocks as the company struggles to supply their rapid expansion across the country. In order to correct these issues, the company recently announced several initiatives:
- A physical count of inventory at all stores, resulting in a reset of systems, and more accurate ordering and shipping data.
- Better forecasting and allocation of product based on sales history and promotional plans to ensure the right amount of product is in the right place at the right time.
- Adjusting delivery schedules so stores receive merchandise more frequently.
- Providing new training and processes to headquarters and in-store teams to create good routines and engaging store team members.
The company hopes the new procedures will help retain current customers and lure back past customers as advertised merchandise becomes fully stocked in all locations.
Aggressive New Pricing Strategies
Target Canada has faced many consumer complaints regarding high prices and the limitations of its price-matching policies. In order to better compete with the likes of Walmart Canada, the company has announced several changes:
- Price matching for any local competitor’s flyer or weekly ad (print or online), and price matching for select online retailers, including Amazon.ca, Walmart.ca, Bestbuy.ca, Toysrus.ca, Babiesrus.ca, CanadianTire.ca, Futureshop.ca and Sears.ca.
- Guests can now use popular apps, such as reebee and flipp to price match, instead of bringing a printed flyer.
- Price match can now be completed at the register instead of guest service.
Target Canada has also added about 1,000 additional items to its roster of 20,000 items that are regularly shopped, to compare prices with its largest competitors.
“If we see a like item priced higher at Target, we’ll lower it,” said Schindele. “And with the addition of our price match guarantee, and 5 per cent off every purchase with a REDcard, guests should be confident they’re getting the best price at Target.”
The effort seems to be working. A recent pricing study from Kantar Retail showed that an identical basket of goods cost 3.9 percent less at Target Canada than at Walmart Canada. The study featured a basket of 33 identical national brand items from grocery and health and beauty categories at stores located within five kilometers of each other. Many of the items were part of Target’s new pricing strategy.
Expanding Merchandise Assortment
Target Canada is expanding relationships with exclusive and Canadian brands to appeal to a broader customer base. Some of the new merchandising improvements include:
- A new partnership with popular Canadian interior designer and HGTV star, Sarah Richardson, will feature an exclusive new line of home décor in Fall 2015. “We are thrilled to be working with Sarah on this exclusive new home décor line,” said John Butcher, SVP of merchandising. “It’s exactly the kind of creative and exciting design offering that only Target can deliver.”
- Partnering with Roots to extend the exclusive and popular Beaver Canoe assortment, with expanded home décor, and the addition of new apparel like sleepwear and slippers coming this fall.
- In Apparel, expanding the maternity assortment by 50 per cent in September. In addition, Nick & Nora, the popular U.S. women’s fashion line, will be available in Target Canada stores next year. The previously announced Altuzarra for Target designer collaboration launches September 14. Also, early next year a plus size line will be introduced.
- Expanded cosmetic lineups, through an exclusive partnership with e.l.f. and the addition of an “e.l.f. essential” line, as well as tripling the space allotted for the popular NYX line in October.
- In September, Target Canada is launching an exclusive brand of household cleaners called Better Life, as well as the exclusive eco-friendly line Ecover from Europe.
- In Home, the launch of the exclusive line of appliances called French Bull, which will bring exciting color and design to everyday appliances at a great price. In addition, this fall Target Canada will also be bringing to stores an exciting new range of well-known small appliance brands some of which have been previously unavailable in mass retail.
- Overall, between now and Christmas, Target will be bringing more than 30,000 new items to its assortment, from the upcoming Halloween and Holiday assortments, to Fall apparel.
Target is hopeful all of these changes, with more to come, will lead the Canadian operations into a successful holiday season and hopes for profitability going into 2015. With slower expansions planned going forward, Target now has the time it needs to fix its supply chain issues and regain the consumers’ trust.