Richmond Review · Page 1
Friday, January 16, 2015
the richmond
Making art out of ordinary situations 8
REVIEW RICHMONDREVIEW.COM
FRIDAY, JANUARY 16 2015
Target to close up shop in Richmond
‘Empty shelves is a retailer’s kiss of death’
Retailer to shutter all Canadian stores and focus on U.S. operations
by Jeff Nagel Black Press
by Matthew Hoekstra Staff Reporter Fourteen months after opening at Lansdowne Centre, the department store Target is ready to pull out of Richmond. U.S.-based Target Corporation announced Thursday it will close all its Canadian stores after filing for creditor protection, paving the way for a liquidation process at 133 stores across the country. The wind-down process will now begin at the Richmond store, and all locations will likely be closed within 16 to 20 weeks, according to a company spokesperson. Brian Cornell, Target Corporation chairman and CEO, said in a news release the company was unable to find a scenario that would make Target’s Canadian stores profitable until at least 2021. “Personally, this was a very difficult decision, but it was the right decision for our company. With the full support of Target Corporation’s board of directors, we have determined that it is in the best interest of our business and our shareholders to exit the Canadian market and focus on driving growth and building further momentum in our U.S. business.”
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Matthew Hoekstra file photo Target has announced it will close all its Canadian stores, including the Lansdowne Road location in Richmond.
In Richmond Target spent millions converting a former 138,876-squarefoot Zellers store at Lansdowne Centre to accommodate the Target bull’s-eye. As part of its renovations, Target also paid for perimeter sidewalk and landscape improvements. The local store opened with little fanfare Nov. 13, 2013. The retailer employs approximately 17,600 people across Canada. It’s seeking court approv-
al to ensure nearly all employees not required for the full wind-down period receive a minimum of 16 weeks of severance. “The Target Canada team has worked tirelessly to improve the fundamentals, fix operations and build a deeper relationship with our guests. We hoped that these efforts in Canada would lead to a successful holiday season, but we did not see the required step-change in our holiday perfor-
mance,” said Cornell. “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 company estimates the cost to close its Canadian stores at $500 to $600 million. Another major department store is also leaving Richmond soon. Sears is scheduled to vacate its Richmond Centre location by Feb. 28, 2015,
according to a decision announced by Sears Canada in 2013. Other retailers have also struggled lately, including Sears, and fashion outlets including Mexx, Jacob and Smart Set also intend to close. SFU business and marketing professor Lindsay Meredith said Target’s withdrawal will send a particularly strong warning to other U.S. retailers considering Canadian expansion, such as Nordstrom’s.
Simon Fraser University 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.
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