The downfall of Target Canada

Last January, Target Canada — the Minnesota retailer's ambitious northern expansion — filed for bankruptcy protection. It had opened more than 100 stores in a little under two years. All of them closed by April.

Prior to the Canadian closings, Target had seemed to have the golden touch. The company had never suffered such a widespread, public and costly failure; It's estimated the aborted expansion cost the company billions of dollars.

A year after the bankruptcy filing, Joe Castaldo of Canadian Business dug into the factors behind Target Canada's collapse. His article, "The Last Days of Target," presents "the untold tale of Target Canada's difficult birth, tough life and brutal death."

Castaldo joined MPR News host Tom Weber to talk about his investigation, which included interviewing close to 30 former employees of the retail chain. Target's expansion plan, it seems, was doomed by its own aggressiveness.

"They wanted to open 124 stores in a year, essentially, and they expected to be profitable within that time," Castaldo said. "That was a very ambitious plan, and everything that went wrong — all of the problems that Target Canada faced — are a result of that plan."

Target entered Canada by acquiring the leases to 124 Zellers locations, which was a discount store chain.

"They all of a sudden owned 124 stores that they're essentially paying rent on. You don't want to have these stores sitting empty for very long," Castaldo explained.

The rush meant that there wasn't time to properly address a series of crippling inventory management software problems. In his article, Castaldo catalogues the data entry missteps that had a domino-effect throughout the entire chain. Incorrect information meant that shipping containers couldn't be packed correctly, warehouses couldn't receive orders and items didn't fit on the shelves.

It was "the biggest, worst IT nightmare you could imagine," Castaldo said.

Target Canada launched in spite of these problems, but customers were greeted with rows of empty shelves. Software errors meant that while stores were continually short on product, Target's distribution centers were so overwhelmed, the company had to rent extra storage.

The problems compounded from there.

"Target Canada would eventually learn what happens when inexperienced employees working under a tight timeline are expected to launch a retailer using technology that nobody — not even at the U.S. headquarters — really understood," Castaldo writes in his article.

The full story is available from Canadian Business.

For the full discussion with Joe Castaldo on the downfall of Target Canada, use the audio player above.