The Story of Target Canada and the Brand Impact of the Supply Chain!

The responsibility for protecting and promoting your product or company brand is often assigned to the marketing department in general. But in reality the supply chain organization plays a huge role as the supply chain can positively or negatively impact your brand in many significant and different ways. This was the case with Target.

One of the clearest examples of the supply chain’s role in serving and protecting your brand can be found in the history of Target Canada. With unprecedented plans for expansion in Canada, Target had to shut down its entire operations just two years after it began operations.

Supply chain performance was a key element that led to this massive outage and damage to the Target brand.

The Final Days of Target”

An article entitled “The Last Days of Target: The Untold Story of Target Canada’s Difficult Birth, Hard Life, and Brutal Death” in Canadian Business Magazine chronicles the story of what happened to this well-known brand. Expansion plans into Canada were enormous and the timeline for rapid entry into the market was unprecedented.

I was in retail at the time, and there was a stir in the retail community that the target timeline for expansion was at best overly ambitious and at worst fatally flawed. Everyone watched to see what would happen.

When the company first started opening stores, it was common to walk into a store and see rows and rows of empty shelves. This was not a rare occurrence, nor was it quickly resolved. This visual manifestation of issues in their supply chain was evident in every store, everywhere, week after week after week. “Customers get mad at the brand when they see empty shelves.” Something was clearly wrong in their supply chain!

The article “The Last Days of Target” states that “Target Canada had once printed a weekly flyer in which almost every single item on the front page was sold out”. IMPRESSIVE!

I knew firsthand that the top priority for retailers and the supply chain team was to be proactive and upfront in ensuring product was available in stores and online for any upcoming promotion. There were NO exceptions!

Looking in from the outside, it was very obvious that something was seriously wrong with Target Canada’s supply chain.

The article continues to discuss the various internal issues that Target Canada dealt with.

This included the entire product data management system, business processes, organization and workflow for change management. There was no accuracy or integrity in dozens of data fields for thousands upon thousands of skus. The result impacted all other downstream business processes, from ordering from suppliers, to having accurate inventory visibility, to sending fulfillment signals to their distribution centers and forecasting and replenishing inventory levels.

They implemented and integrated new systems across the company. Having dealt with many system migrations to new systems, including a retail WMS installation, I knew that doing just one system installation at a time, let alone installing multiple new systems at the same time, was a daunting task.

It doesn’t take many minutes, hours, or days to shut down a retail system for customers, executives, and colleagues to be at least concerned about what’s going on in I/T and the supply chain. Store shelves can empty extremely quickly. And online customers will switch to a competitor in no time.

Their distribution centers were completely clogged as a result. With all the data integrity, system, ordering, fulfillment and replenishment issues, there was no way for the distribution centers to quickly and efficiently receive and store goods, and then fulfill and replenish orders for the stores.

Additionally, inaccuracies in the planning and ordering process meant that suppliers’ shipping dates were inaccurate and out of alignment with the company’s merchandising calendar. As a result, distribution centers were forced to add offsite storage. This alone would have led to an almost unmanageable loss of control and visibility.

Within two years of starting operations, Target Canada had to close its doors. The expansion was a failure. And while there are many dimensions and dynamics that contribute to the brand’s demise, the supply chain was a crucial element in its failure.

The role of the supply chain in brand management

There are many aspects of supply chain responsibility that can impact a company’s brand. This applies to many functions in an organization. But more often than not, the supply chain is really the engine that drives the way a company operates. And if there are any problems with this engine, they will almost immediately affect the efficient operation of the company, which can lead to a negative impact on the corporate brand.

As supply chain leaders, be aware of this fact. What you do affects the brand of your company. This includes day-to-day interactions with your employees, your suppliers, and your customers.

The supply chain can make or break your company brand and your own personal brand!

Originally published August 8, 2017.

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