Like Target, J. Crew had customers that were familiar with J. But J. Crew responded quickly, absorbing the duties on online purchases and offering a flat shipping fee to reduce the cross-country price differential. It also reverted to allowing Canadian customers to shop the U.
Crew website in U. As a result of its careful market entry and execution, J. In the end, Target struggled with the translation of its successful U. A slower rollout of stores, the model that worked so well for J. Crew, might have helped it to gain experience in the market and adjust its strategy before expanding further.
In order to stock products, the company had to enter information about each item into SAP. There could be dozens of fields for a single product. For a single product, such as a blender, there might be fields for the manufacturer, the model, the UPC, the dimensions, the weight, how many can fit into a case for shipping and so on. Typically, this information is retrieved from vendors before Target employees put it into SAP. The system requires correct data to function properly and ensure products move as anticipated.
A team assigned to investigate the problem discovered an astounding number of errors. Product dimensions would be in inches, not centimetres or entered in the wrong order: width by height by length, instead of, say, length by width by height. Sometimes the wrong currency was used. Item descriptions were vague. Important information was missing. There were myriad typos. It was also something the company should have seen coming. The rush to launch meant merchandisers were under pressure to enter information for roughly 75, different products into SAP according to a rigid implementation schedule.
Getting the details from suppliers largely fell on the young merchandising assistants. In the industry, information from vendors is notoriously unreliable, but merchandising assistants were often not experienced enough to challenge vendors on the accuracy of the product information they provided.
The staff were also working against the countdown to opening. The project was reviewed independently and such review concluded that there is no Accenture connection with the issues you refer to. The investigating team went to Fisher and John Morioka, the senior vice-president of merchandising, with a drastic proposal: Shut down the entire merchandising division so everyone could comb through and verify every single piece of data in the system—manually.
The team stressed there was simply no other way to get it done. Hiring an external consultant would take too long, and it was impossible to expect the employees to do such a painstaking, arduous task and their regular jobs at the same time.
Fisher immediately gave the green light. Merchandisers essentially had to confirm every data point for every product with their vendors. A buyer might have 1, products and 50 to 80 fields to check for each one. Complicating matters was the dummy information entered into the system when SAP was set up. That dummy data was still there, confusing the system, and it had to be expunged.
To kick it off and rally spirits, a few employees performed a hip-hop song-and-dance routine on the first day.
Ice cream and pizza flooded in to keep employees fuelled up, some of whom stayed well past midnight that week, squinting at screens through bleary eyes. There was an entirely different process to ensure the correct data actually made it into SAP.
Extra contractors had to be hired in India, too. Periodic data blitzes in individual departments became common into the following year. But data week was successful on a number of fronts. It weeded out the worst of the errors and forced Target Canada to realize the importance of accurate data.
It was also a bonding experience—as terrible as it was. The store officially opened the next day, along with two others in the province. The company had been teasing consumers for a year at this point, starting with a pop-up shop in Toronto featuring designer Jason Wu. There had also been a high-profile ad during the Academy Awards to hype the Canadian launch, and actors Sarah Jessica Parker and Blake Lively were lined up to appear at the grand opening. At the Guelph store, Fisher, wearing a red checkered shirt and a red tie, pointed out the bright lighting and wide aisles, and promised a quick, convenient checkout experience.
Some of his former employees dismiss him as just a media-friendly face, but others describe him as whip-smart, detail oriented and incredibly dedicated to Target. His tour of the first store was breathlessly covered by media, and consumer anticipation was running high. News crews were ready to snag customers as they left and cajole them into showing off their purchases. The first items bought at Target Canada? Problems multiplied, and the public mood continued to turn against Target.
Consumers soured on the brand when confronted with empty shelves—the exact scenario some senior employees warned of earlier in the year. Target Canada had ordered way more stock than it could actually sell. When the buying team was preparing for store openings, it instead relied on wildly optimistic projections developed at U. According to someone with knowledge of the forecasting process in Minneapolis, the company treated Canadian locations the same way they did operational stores in the U.
Even if the stores were in out-of-the-way spots—and some of the locations in the Zellers portfolio certainly were—the company assumed the strength of the Target brand would lure customers. There was another element at play, too. In Canada, some buyers also relied on vendors for guidance, but vendors fell under the Target spell like everyone else. In consequence, Target ordered too much product that first year. It all hit the distribution centres at the same time, creating a severe bottleneck.
The depots were hampered by other factors, caused by lingering data problems and the learning curve associated with the new systems. Sometimes, the issues concerned dimensions and quantities.
An employee at headquarters might have ordered 1, toothbrushes and mistakenly entered into SAP that the shipment would arrive in a case pack containing 10 boxes of toothbrushes each. But the shipment might actually be configured differently—four larger boxes of toothbrushes, for example. Warehouse workers got so desperate to move shipments they would sometimes slice open a crate that was supposed to contain, say, a dozen boxes of paper towels but only had 10, stuff in two more boxes, tape it shut and send it to a store that way.
Tractor-trailers sat idling in the yards, waiting to be unloaded. The situation got so bad that Target scrambled to rent a handful of storage facilities to accommodate all of the inventory flooding in.
The process of determining which goods to send to these rented facilities was haphazard, making it difficult to track things down later. Another recalls feeling shocked when visiting the rental warehouse in Vancouver. American expats, accustomed to the efficiency of the U.
The issues at the distribution centres caused havoc downstream. Pricing — how large was the mark up? Did customers actually save when taking into account transportation and convenience? Or was it more of an emotional let down? You must be logged in to post a comment.
Skip to content. The HBS Digital Initiative brings together perspectives across disciplines to help people understand how technology is transforming organizations and the greater world. Want to learn more about technology and organizations? Email Password Remember Me Lost your password? Business Model Expect more, pay less Target was similar to other retailers such as Walmart and Kmart, as they centered their business models around the traditional discount retailer value chain. December 8, Sid Bhandari says:.
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