So long, Target.
The U.S. retailer's disastrous expansion into Canada will be a textbook case for years to come in business schools everywhere of how not to go charging into a foreign market.
When the final of its 133 stores, including the one at Pine Centre in Prince George, closes in June, 17,600 workers will have lost their jobs and Target Corp. will have lost more than $5 billion.
There are many reasons for Target's spectacular failure in Canada, some of them obvious to any Canadian shopper who had ever visited a Target store in the United States and eagerly anticipated the same shopping experience at home.
South of the border, Canadians found in Target a cool and fun discount store - a Wal-Mart with personality. The prices were great, the goods were cheap but still had some flair and the stores and the staff were lively, creating a "shopping experience," that treasured goal for all retailers. That's not what Target delivered when they set up shop in Canada.
What Prince George shoppers got was seen in Target stores across the country - surprisingly high prices, surprisingly little selection, and far too many empty shelves due to distribution problems.
If Target had been able to turn it around in the first three to six months, the retailer might have survived but the improvements were neither substantial enough nor fast enough to satisfy cost-conscious shoppers.
As marketing analyst Brynn Winegard told the Canadian Press, Target's first advertising campaign declared "Target Loves Canada" but the company's overconfidence didn't address what was really important - that Canada love Target. What Canadians loved about Target was the U.S. experience, so the disappointment when the expectation fell far short of reality was shared by word of mouth and online by Canadian shoppers from coast to coast. The retailer not only failed to manage their Canadian operations properly, they failed to manage and then meet the expectations of shoppers.
The federal Conservatives find themselves in a similar situation. Heading into an election this year, Stephen Harper and his gang have been raising expectations about budget surpluses and sound fiscal management. That was all fine and good when the price for a barrel of oil was $100 but now that's fallen to less than half of that in the past six months, suddenly finance minister Joe Oliver says the next federal budget will be delayed until at least April.
Oliver blamed the delay on uncertainty and instability in the global oil market, choosing to gloss over the certainty and stability already there. The forecasts stating oil prices would remain the same for the next five years were certainly wrong and the Conservatives were certainly wrong to put their faith in them. Going forward, the only certainty is no certainty and guessing is a dangerous and costly game.
With no agreement across the industry about how far prices will fall, how long they'll stay low and how soon they'll rebound back up to that $100 per barrel mark, the federal government should take its own advice and set a budget the same way households set their budgets. Anyone that puts together a personal budget banking on significant income from a potentially lucrative but mostly unreliable source (lottery tickets, dividends from stock investments, increases in real estate prices) would be criticized for risky financial management, so why does the federal government (and most other governments, to be fair) look to receive revenues from any other sources but from taxation, the only income stream they directly control?
The smart person sets low or non-existent goals for revenue from anything other than their job (and budgets for losses at the lottery booth and the casino) but government uses no such restraint. Instead of following the same example as the financially prudent individual, government looks to all sorts of other revenue streams, from gambling to natural resources, and then sets targets on that money coming in that are little better than best guesses.
Overconfidence in those guesses cost Target billions. It will also cost the Conservatives billions in their election-year budget and Canadian voters could ultimately make the Conservatives pay for that overconfidence the same way they made Target pay.
