Target Canada focusing on ‘ fundamentals’
Inventory issues, underwhelming website and lack of ‘ local relevance’ cited as concerns
TORONTO — Target Corp. executives are evaluating the retailer’s Canadian locations on a store- bystore basis after an abysmal start in this country in a bid to correct “the fundamentals,” the retailer’s CEO said Wednesday.
“Every store has to improve,” Brian Cornell said as he attended a national meeting at the company’s Mississauga, Ont., headquarters with executives, corporate employees and some store leaders and staff.
“I’m not happy with our performance in Canada today. ( Target Canada president) Mark ( Schindele) is not happy. Our leadership team is not happy.”
But the former PepsiCo executive, named CEO in July after the ouster of Gregg Steinhafel, stopped short of saying that Target Canada would close a number of stores in this market if efforts to repair its patchy supply chain and improve sales fail to win over alienated customers.
“I am certainly going to spend time assessing the business,” which will have 133 stores by year’s end, Cornell said. His main focus is “getting back to the basics,” most notably making sure Target has inventory in stock as it prepares for the critical fourthquarter Christmas period, a time of year when retailers typically generate the lion’s share of sales and profit.
Target has a lot riding on this Christmas in Canada.
After revealing another set of disappointing quarterly results in an August conference call, Cornell said he would work closely with Canadian executives to improve Target’s performance here and assortment of merchandise by the holiday. The chain has plans to replenish 30,000 out of 70,000 Target Canada items with entirely new merchandise for the Christmas shopping season.
Inventory problems continue to plague the retailer, however, which is in the unenviable position of trying to get disappointed customers to give it another chance even as it continues to display bare shelves in its stores.
“How often do you stock your shelves?” Calgary- based Twitter user @ ruebyretro asked @ TargetCanada on the social media site Tuesday. “Bare as hell at Chinook ( Centre mall) in Calgary … or is it Soviet Russia…?”
Similar inventory lapses were evident in a mid- town Toronto Target store on Wednesday. Some racks were fully stocked with neatly folded clothing, but there were gaping shelf holes in the home storage, decor and shoe departments.
As it heads into the Christmas quarter, another strike against Target is its lack of a website that sells goods or shows its selection and prices in an environment where 49 per cent of Canadian Internet users shop online monthly, according to a PwC Canada survey, and 34 per cent always research clothing and footwear online before they head out to shop in retail stores. Rivals including Canadian Tire, Walmart, Costco, Best Buy- Future Shop, Hudson’s Bay, Sears and all of the Gap brands including Old Navy and Banana Republic, to name but a few, offer that feature to shoppers.
Cornell did not give a timeline Wednesday for when Target Canada might have a more detailed sales website, saying the company’s prime focus is improving returns and performance at its store base and making sure inventory is in stock.
The executive said he had spent a great deal of time in Canada during the past 20 years, primarily working in consumer packaged goods, and he understands that Canadian consumers are different from American ones. “We also recognize we have to have local relevance,” he said.
As of the last quarter, Target reported an 11.4 per cent dip in secondquarter sales at established stores and has lost $ 1.36 billion in pre- tax earnings since opening in Canada.
The retailer has, however, made some changes since Cornell took over the CEO role. After an initial outcry in Canada over too- high prices, Target has begun aggressively lowering prices on key goods in an attempt to fight Walmart. An identical basket of consumer goods cost 3.9 per cent less at Target than at Walmart in August, according to a report from Kantar Retail.