By Jeff Nagel
Just 18 months after they moved into Tillicum Centre, U.S. big box store Target is pulling out. The retail giant is abandoning all 133 stores in Canada.
Target wouldn’t confirm how many people work at the Tillicum Centre store but a corporate spokesperson told the Saanich News a typical store employs about 100 to 150 people, and added that all stores in Canada, including 19 in B.C., will likely be closed within 16 to 20 weeks.
“We had great expectations for Canada but our early missteps proved too difficult to overcome,” said Target chairman CEO Brian Cornell. “Personally, this was a very difficult decision, but it was the right decision for our company.”
He add there was no realistic scenario for the money-losing Canadian arm to reach profitability until at least 2021. It owns 1,801 stores in the U.S.
Tillicum Centre is owned and operated by national corporation RioCan, which is losing 26 Target stores across the country, representing 1.9 per cent of RioCan’s annual rent revenue. RioCan’s website said the remainder of Target’s Tillicum Centre lease, and all Target leases, are guaranteed by Target’s US parent.
Big box technology store Best Buy suffered a similar Saanich fate when it shut down its 38,000 square feet Uptown space on Jan. 31 of 2013, soon after it had opened. Renovations are underway to convert Uptown’s former Best Buy space for new retailers.
Target was granted protection from its creditors in Ontario Supreme Court Thursday. It employs 17,600 people across Canada.
The Minneapolis-based retailer has B.C. locations in Campbell River, Courtenay, Nanaimop, Victoria, Saanich, Burnaby, Richmond, Coquitlam, Delta, Surrey, Langley, Maple Ridge, Abbotsford, Chilliwack, Kamloops, Kelowna, Vernon, Cranbrook and Prince George.
The stores will remain open during a court-supervised liquidation.
It’s also placing $70 million in an employee trust to ensure a minimum 16 weeks compensation, including wage and benefit coverage for workers not needed for the full wind-down period.
The decision came after an unsuccessful holiday season, Cornell said, despite best efforts by Target Canada to win over shoppers.
“There is no doubt that the next several weeks will be difficult, but we will make every effort to handle our exit in an appropriate and orderly way.”
The American retail giant launched its Canadian expansion in 2013, buying up former Zellers locations and arranging grocery stock through Sobey’s.
SFU business and marketing professor Lindsay Meredith said Target’s invasion of Canada was misguided from the start.
It launched with too many stores at once, he said, and it immediately turned off Canadians savvy to lower U.S. pricing when it instead charged prices in line with Canadian retailers.
“That was exactly what Canadians did not want to hear,” Meredith said.
When stores opened they were missing some of the U.S. brands in home decor and fashion shoppers wanted, he added.
Further blows that entrenched the retailer as a “screw-up” in Canadian minds included a massive data breach at the U.S. parent and recurring problems with empty store shelves.
“Empty shelves is a retailer’s kiss of death,” he said.
The latest challenge for Target has been the dive in the loonie to 84 cents U.S., which has left the company bridging a growing gap between what it pays for stock in the U.S. and what it sells it for in Canada.
But Meredith said he was surprised Target opted for a complete Canadian pull-out, coupled with creditor protection, rather than what he calls a “hedge hog defence” of retrenching to a small number of more profitable stores in key markets.
Big winners from Target’s demise will be established retail and grocery chains like Wal-Mart, Loblaws, Canadian Tire and even Sport Chek, Meredith predicted.
“All these guys will be happy – they just got rid of a major competitor that could have hurt them.”
He expects the stores will be sold piecemeal to multiple buyers “who will bite off a piece of the whale carcass” rather than to one replacement chain.
Other retailers have also struggled lately, including Sears, and fashion outlets including Mexx, Jacob and Smart Set also intend to close.
But Meredith said Target’s withdrawal will send a particularly strong warning to other U.S. retailers considering Canadian expansion, such as Nordstrom’s.
United Food and Commercial Workers local 1518 spokesman Jason Mann said Target’s failure to hire former Zellers workers meant it lacked staff experience to make the operation work.
– With files from Travis Paterson