Woe Canada

Target took it on the Moose Jaw yesterday and no amount of Medicine Hat could change the reality -- it is time to leave Canada:

After its first attempt to expand globally turned into an embarrassing and costly debacle, the Minneapolis-based retailer announced on Thursday that it will shutter its 133 stores north of the border and will instead focus its energies on revitalizing its core 1,800-store U.S. business.

The decision comes less than two years after Target opened its first stores in Canada to much fanfare. The operation quickly became a black eye for the company as it struggled to get the basics right. Its problems keeping shelves stocked were mocked on social media and turned off many consumers, while Canadians also complained that Target’s prices were too high.

How does this happen? The answer is simple -- if you can't get the back end right, nothing on the front end matters:

A number of other well-regarded retailers such as Wal-Mart and Lowe’s have managed to find some degree of success in Canada, [retail analyst Charlie O'Shea] said. So it is especially surprising that Target, which is a fairly good U.S. operator, got it so wrong in Canada by trying to simultaneously build out a distribution network and open dozens of stores.

The distribution network is crucial. If you can't get goods into the stores expeditiously, it affects what the customer sees and it absolutely hurts you in pricing. The distribution network has to be ready to rock and roll before you turn on the lights. Target historically has entered markets with a certain amount of caution; going coast to coast in a huge nation was too much for any fledgling distribution network to handle.

While stopping the bleeding is likely the right thing to do, it comes at a cost in Minnesota:

The aftershocks of Thursday’s decision will be felt at Target’s Minneapolis headquarters. About 600 employees in the United States, many of whom are based in the Twin Cities, supported Target Canada as either a full- or part-time responsibility. The company expects some layoffs here as a result, but doesn’t yet know how many, said Dustee Jenkins, a company spokeswoman.

It's likely to be a big number. Good luck.