It turns out Canadians aren’t identical to Americans when it comes to shopping. The same can probably be said for investing. Don’t assume what works in the U.S. will work here.
When Target made its massive $1.8 billion purchase
of Zellers’ leases back in January 2011 the general consensus was that Canadians would welcome the U.S. retailer with open arms.
There were two big reasons at the time for this optimism.
First, Target would be a major improvement over Zellers which was on its last legs. Secondly, U.S. retailers were pushing hard into the Canadian market. In April 2010, Limited Brands (now known as L Brands) opened a Canadian office in Montreal predicting it would generate $1 billion in revenue north of the border within four years.
America was taking Canadian retail by storm; Target’s success was a certainty.
But then the stores opened and it became abundantly clear that the Minneapolis-based retailer was offering us a poor imitation of its own stores south of the border which Canadians were very familiar with given their cross-border jaunts to Buffalo, Detroit, Seattle and other towns close to the 49th parallel.
Higher prices, empty shelves, poor customer service, less “it” clothing like in the States.You name it and Target got it wrong.
is arguably the single biggest failure in Canadian retail history.
So, what’s to be learned from this colossal blunder?
The biggest lesson is that you can’t provide your clients with an inferior product and/or service and expect that they’re automatically going to jump to attention buying what you’re selling hook, line and sinker. Their trust must be earned. Target was never able to gain our trust and they failed miserably as a result.
Prices. Although Target assured us time and again that the prices paid in its Canadian stores were industry competitive with the likes of Walmart, consumers felt like they were being sold a bill of goods. Make sure that you’re price competitive with the very best in the industry. If you’re still hawking mutual funds with MERs above 2%, you’re not price competitive. Not even close.
One size definitely does not fit all. Target’s stores always appeared as if they were having cash flow problems because the shelves were so empty. No one likes shopping in that kind of environment. The same applies to financial services. While having too many choices when it comes to investing is probably a bad idea, having too few can be equally off-putting. Give your clients at least some
Lastly, give your clients the best. Target started adding exclusive designers to its product offerings in 2014, far too late in the game to make a difference. Don’t scrimp on quality. Give your clients the best whether its mutual funds, ETFs, GICs, insurance, or even customer service. They deserve it.
In the end Target’s losses — more than $2 billion — were too great to overcome. It executed poorly and 17,000 Canadians are paying the ultimate price losing their jobs.
Financial advisors mustn’t take anything for granted in the years to come. Robo-advisors, ETFs, CRM2, you name it, the competitive landscape is heating up. Only the best will thrive and prosper.
So, the next time you get a little overconfident about your business, just remember what happened to Target. Don’t let it happen to you.