In the 1989 movie, Field of Dreams, Iowa farmer, baseball enthusiast, Ray Kinsella (Kevin Costner) is inspired by a voice in his head he can’t ignore – to build a baseball diamond in his cornfield. “If you build it, he will come.” Almost 25 years later, when the decision to open 133 Target Stores in Canada, the Target Executive Powers That Be, probably heard that same voice…”If you build it, people will come”. And although it worked for Kevin Costner, it certainly did not work for Target. Why?
Foreign retailers have flooded the Canadian market in recent years, and Canadians are much savvier now and are expecting a unique customer experience. What’s the “value add” for the customer? Those who fail to give the customer that experience will fail in Canada.
You cannot just open a US chain in Canada, and just expect people to come. Retailers need to innovate, present a unique selling proposition (USP), and offer a customer a great shopping experience.
Walmart, the Bentonville, AR chain of discount stores, has succeeded in Canada because of its USP – its price and pleasant customer experience. Middle-class shoppers are shopping there…why? Well, your customer experience begins when you are greeted at the door, you can sit down and have a bite at McDonald’s, and Walmart has done a fantastic job at helping their customers find everything they need and save money while doing it.
Target, on the other hand, was just a big box store…nothing special – prices were higher than expected and they failed at giving the customer a great experience…. So when one actually found the item they needed on the shelves and in stock, which was rare, returns were such a headache…I tried to return an item, and had to speak to four people to finally get my $20 back. A bad customer experience.
Target is about to close all 133 stores in Canada. Their slogan, expect more, pay less should have been expect less, pay more. They were under-staffed, under-stocked, and over-priced. For instance, young girls across Canada wanted their E.l.f. cosmetics, (a popular makeup and beauty brand) at the same price as they found in the US, but instead, Target not only had trouble getting the product to their stores, but they also charged 3-4 times the price as their US counterparts.
In addition, Target missed the target, when they partnered up with Starbucks….I mean, what Canadian shopper is going to spend $8 on a coffee when they are there to buy a $3 mascara. If they wanted to give their target market an experience, they should have had a Tim Horton’s or a more reasonably priced restaurant at each of their locations.
Retailers need to offer customers an interactive experience, such as food sampling at Costco, makeovers at Sephora, or product demonstrations at Home Depot. At Target, there was nothing special on their shelves that you could not get at a Walmart or Real Canadian Superstore. There was no unique customer experience.
Customer experience is critical – look at the Swedish furniture chain, IKEA. When you enter the IKEA store, you can make yourself at home…it’s one big home furnishings exhibition. Before you shop, you drop your kids off at the supervised play area and ballroom and shop in peace. Then you can stretch out on a variety of beds, or simply see how many people in your family can sit on the sofas. At IKEA, its one big maze…in fact, you are lucky to find your way out. If you do, you will bump into the market hall – where you can shop for linens, picture frames, home lighting, and clocks; the IKEA restaurant, which opens for breakfast as soon as the store opens; and the self-serve area, where you pick up the flat-packed furniture items you saw earlier in the room settings.
Innovation is key – that’s why Sears, an American retailer, who entered the Canadian market in 1953, failed. Sears became less and less relevant in the market as time passed. For instance, the apparel became dowdy and dated, and since the late 1980’s were no longer hip, chic and leading edge.
And Target is not alone. Indigo’s brick and mortar locations are also facing troubles because Canadian customers see these locations as a sort of like a “ showroom”, whereby they can look and flip through the books in the store, and turn around and purchase them online for a cheaper price. As well, with the emergence of e-books, book sales have also been challenged. Indigo needs to come up with an innovative business model to save itself from being obsolete.
Look what happened to Blockbuster in 2010…they became passé and went bankrupt, and now Netflix is a $28 billion dollar company, about ten times what Blockbuster was worth. Blockbuster’s business model of charging customers late fees, was the company’s Achilles heel – company profits were highly dependent on penalizing its patrons…, which did not create a good customer experience. They also failed to keep up with the trends of online video streaming. Netflix offers subscriptions, which makes annoying late fees unnecessarily, and customers can watch a video for as long as they want or return it and get a new one. A great customer experience.
So here is a note for retailers hoping to come to Canada. Canadians are smart…we wanted what Target’s slogan promised…expect more, pay less. Canadians do expect more and want to pay less. So, unless you can offer us something we can’t experience anywhere else, or offer us something we can’t get elsewhere for a cheaper price, I would suggest you just move on, and don’t bother entering our market.
For those who missed it, here’s the CBC interview I gave…
Carolyn Stern talks about Target Canada Missing the Target https://www.youtube.com/watch?v=pP1OVmWOMOQ&feature=youtu.be …