This is a response to Rachel Chan’s post (https://blogs.ubc.ca/rachelchan/2013/09/21/target-ing-the-right-things/).
The post highlights three main issues attributed to Target Canada’s disappointing results: 1) unbalanced inventory 2) higher than expected prices 3) poor customer service
According to the graph below, Target Canada sales are lower relative to that of Target U.S. Target announced its action plan to remedy the situation by increasing sales in the various store divisions and by improving inventory stock. Rachel Chan stresses the importance of Target’s timed decision-making progress and the consideration of consumer satisfaction.
However, the higher prices of Target Canada products are the main reason attributed to lack of sales. Since there is major competition from other retail stores such as Walmart and Superstore, consumers can easily substitute towards the other stores, should the product prices be undesirable, entailing that demand is elastic. Target Canada possesses few specialty goods, meaning it cannot justify its higher prices in the perspective of the consumer. Target has likely underestimated the high barriers to entry in allocating their stores to Canada, barriers which may include factors such as tariffs and transportation fees. There are also less Canadian consumers than American consumers, further lowering the sales of Target Canada relative to Target U.S. Furthermore, the purchasing patterns and preferences of Canadian consumers may also be different than American consumers; this may be part of the reason why Target Canada has difficulty matching demand with inventory.
(Shaw)
Works Cited
Chan, Rachel. “”Target” –ing the right things.” Rachel Chan’s Blog. WordPress, n.d. Web. 7 Nov.
2014. < https://blogs.ubc.ca/rachelchan/2013/09/21/target-ing-the-right-things/>.
Shaw, Hollie. “Target Corp expects Canada sales to double despite weak start, data breach.”
Financial Post. Postmedia Network Inc., 26 Feb. 2014. Web. 7 Nov. 2014. <
http://business.financialpost.com/2014/02/26/target-corp-profit-almost-halved-as-cost-of-data-
breach-bites/>.