It’s hard to imagine that when 2015 comes to a close, people won’t point to Target’s Canadian collapse as one of the year’s biggest business stories. In the United States, Target is a sure-footed colossus that, until recently, had a well-deserved reputation for a chic assortment of products at rock bottom prices. Before their much heralded expansion into Canada, it had a loyal tribe of Canucks who flocked to their US locations on cross-border shopping sprees. The promise of a neighborhood Target made many Canadians giddy with anticipation. The fact that Target took over 200+ locations from defunct retailer Zellers made a Target in every neighborhood a real possibility.
Once the Canadian stores opened, however, shoppers were left disappointed as they walked the aisles with that old Peggy Lee song in their head: “Is that all there is?”
I recently had the chance to talk with one of Target Canada’s leading apparel suppliers, and thought it would be worth sharing their perspective of the epic fail. From this supplier’s point of view, the supply chain was Target Canada’s problem and the empty shelves were just the symptoms of deeper issues. Some examples:
- Target had poor visibility into the status of inbound shipments, since they arranged pick-ups for their suppliers’ merchandise. The pick-up would happen and the supplier could see the shipment’s progress until it reached the Target distribution center (DC). Weeks later, Target buyers would call wondering why the supplier failed to ship the goods, when in fact the goods were sitting in the DC’s yard (or worse, already in the building).
- Imagine the cascade of confirmations and transaction acknowledgements that were not available to Target buyers such that they didn’t know they were in possession of the goods on a purchase order;
- For the apparel merchandise in question, this supplier operated on 4 – 6 week cycles, but Target rarely managed to get product on the racks before week 4 or 5. The supply chain could never deliver on the merchandise plan.
- Target’s procurement and EDI systems performed unevenly
- Relying almost exclusively on their systems to generate purchase orders, Target buyers were frequently unaware of the massive orders the systems placed on their behalf. While the supplier would have been delighted to ship massive orders week after week, they knew it didn’t line up with the limited sales data that Target had provided. The supplier would intervene and ask, “Did you mean to send this purchase order?” Almost always, Target buyers, somewhat shocked, answered no;
- Inactive items, dropped from the merchandising plan, ended up on purchase orders. Alerted by the supplier, Target buyers fixed the problem on that given purchase order but the following week, the same inactive item would pop up again.
- Target Canada’s vendor compliance manual was incoherent and not well enforced
- Some elements of the vendor compliance manual did not make sense to the supplier, including instructions on label placement that would leave bar-codes unreadable;
- Ultimately, the supplier ignored the manual in favor of common sense and Target never once raise the issue of non-compliance.
Based on this supplier’s experience, it is difficult to say whether the cause of the problems was systems related (including set-up and configuration) or simply a lack of training on how to use those systems. It was most likely a combination of the two. Regardless, supplying Target’s Canadian operations was a completely different experience than supplying other mass merchants in the Canadian marketplace, and those differences had a lot to do with the overall shopping experience in Target’s stores.
This is just one supplier’s experience. It would be interesting to see if it resonates with other suppliers’ experience. Did you supply Target Canada? If so, did things run smoothly or did you run into the same frustrations or an entirely different set of problems? I’m sure we’d all like to learn from your experiences – anonymity guaranteed.