Why Did Target's Strategy Fail? Did the Company Do Anything

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The Answer is A home replication strategy may be used when a company has a proprietary product or service that faces limited competition abroad. In Canada, however, Target faced unexpected operational costs, different consumer preferences, and increased competition from established retailers.
1. Business costs are generally higher in Canada. Some unique local regulations require additional costs. The country's relatively small market makes it harder to obtain economies of scale. Eventually, Target stores in Canada charged higher prices and offered less merchandise.
2. Although many Canadians shop across borders, their preferences can be quite different from U.S. shoppers. Walmart's Canadian unit carries only 20% of the products sold in its U.S. stores, but offers a variety of products that are popular in Canada. As the Nordstrom executive stated, "You can't just say that we are close in proximity or we both speak English, so it should be the same."
3. Target's stores in Canada faced competition from their own stores in the U.S. as most Canadians live near the border and can easily shop in the U.S. for lower prices. Also, to fend off Target, established retailers increased their competitive efforts.
Given these considerations, the home replication strategy was not right for Target in Canada. Canada did present some opportunities for Target due to the country being geographically close, but Target had previously established brand recognition among cross-border shoppers. Acquisition seemed a more appropriate entry mode. Due to a shortage of retail spaces in prime locations, Target acquired Zellers stores to obtain an immediate presence in Canada.

Why Did Target's Strategy Fail? Did the Company Do Anything

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Why Did Target's Strategy Fail? Did the Company Do Anything

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