SAP is great if you got years to implement and fix but them being sold SAP as a working of the shelf solution is hilarious.
Exactly. I quite liked working with SAP as opposed to say Oracle or even MS Dynamics. But SAP is a real bear to get working properly with the underlying business, to the point that the business often tries to change its practices to better work with SAP rather than taming SAP to actually work for the business.
Just hearing about everyone at Target just slamming in that underlying master data without any checks and controls...horrifying. And then Accenture's take on it as a successful SAP implementation. Crazy.
I wonder if Target made any attempt to re-negotiate their leases? They had a pretty big stick and could have told the landlords "if you don't reduce our rate, we won't be profitable until 2021 and we are going to exit and leave millions of square feet and empty anchors hanging".
Almost all those locations are still empty today and there's no indication there are any Canadian retailers ready to fill up those spaces given that we are going into a downturn.
They might have, but not in so many words as it was quite a shock and some of the leasing guys for the major retailers were side-swiped and pissed right off when it happened. I'd wager the savings in the leasing costs would have been negligible and you had a CEO who simply wanted to end the fiasco as he could do so and forever blame someone else vs. continue to try and shoulder some blame.
No one can ever claim he was wrong to pull out. No one can ever say he should have stayed. It was a win / win for the new CEO as hindsight would never be available.
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I really miss Target. I loved Target Canada. I think they would have been fine if they opened a few pilot stores in Ontario and slowly expanded while growing the supply chain. Buying all of Zellers in one fell swoop was their downfall.
For me, Target's biggest problem wasn't that they bought all Zellers locations in one shot. The problem was that after closing all the stores for hundreds of millions in renovations, what they re-opened was...
....Zellers. Same crappy merchandise selection, same empty shelves, same depressing atmosphere, same inability to compete with Walmart on price. Even the same colour scheme. They would have been better off simply buying Zellers and not making a singe change. Their front end operations was a poorly realized as their back end.
Last edited by Resolute 14; 01-22-2016 at 10:41 AM.
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They might have, but not in so many words as it was quite a shock and some of the leasing guys for the major retailers were side-swiped and pissed right off when it happened. I'd wager the savings in the leasing costs would have been negligible and you had a CEO who simply wanted to end the fiasco as he could do so and forever blame someone else vs. continue to try and shoulder some blame.
No one can ever claim he was wrong to pull out. No one can ever say he should have stayed. It was a win / win for the new CEO as hindsight would never be available.
The parent company guaranteed a lot of the leases in exchange for landlords helping out on renovation costs. So if they came back and said "we need a price break" the answer they'd get would be "go bankrupt and we'll collect from Target USA, don't let the door hit you in the ass on the way out."
It's holding up their CCAA right now, Target wants the landlords to give up the right to collect from the parent, which they've said they won't do. The judge threw out their first restructuring plan right away.
I read the article, and it seems like the sole blame was on technology and 3/4 of the article is blaming that data and system errors was the cost of the failure. The article doesn't really touch on the competitive market, over-confident expansion plans, and US-Canada cultural differences were other main factors...
Just blaming the tech geeks seems unfair...
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I read the article, and it seems like the sole blame was on technology and 3/4 of the article is blaming that data and system errors was the cost of the failure. The article doesn't really touch on the competitive market, over-confident expansion plans, and US-Canada cultural differences were other main factors...
Just blaming the tech geeks seems unfair...
It does mention that the grocery sector was highly competitive and that Target bowed out of that segment early on- though Target would have been better served not trying to compete in that segment in the first place.
The tech is only as good as the people who use it. And it sounds like no one from the top Target executives to entry level employees really understood how to use the tech, why it was chosen, or how to get anything out of it. Just an ill-conceived operation from the start.
For me, Target's biggest problem wasn't that they bought all Zellers locations in one shot. The problem was that after closing all the stores for hundreds of millions in renovations, what they re-opened was...
....Zellers. Same crappy merchandise selection, same empty shelves, same depressing atmosphere, same inability to compete with Walmart on price. Even the same colour scheme. They would have been better off simply buying Zellers and not making a singe change. Their front end operations was a poorly realized as their back end.
I read the article, and it seems like the sole blame was on technology and 3/4 of the article is blaming that data and system errors was the cost of the failure. The article doesn't really touch on the competitive market, over-confident expansion plans, and US-Canada cultural differences were other main factors...
Just blaming the tech geeks seems unfair...
Seems to me like the bigger issue was the strangling factors in Canada that make it impossible for most entrepreneurs to start up in any sector.
Huge real estate prices, red tape around supply, dairy cartels that make profit margins invisible, high labour costs, etc.... All of this essentially made it impossible for them to set up stores with stocked shelves.
I read the article, and it seems like the sole blame was on technology and 3/4 of the article is blaming that data and system errors was the cost of the failure. The article doesn't really touch on the competitive market, over-confident expansion plans, and US-Canada cultural differences were other main factors...
Just blaming the tech geeks seems unfair...
The main reason these big chains are competitive is because of their supply chain, data management and how efficient it is. When your business is essentially based on it, a failure with that system will trump all else.
Which is why it is so baffling why they went with a new system on the timeline they had. So unless the tech geeks were the ones who pushed for it, blaming them is indeed unfair because they were given a pretty monumental task.
The whole thing was just set up to fail.
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Seems to me like the bigger issue was the strangling factors in Canada that make it impossible for most entrepreneurs to start up in any sector.
Huge real estate prices, red tape around supply, dairy cartels that make profit margins invisible, high labour costs, etc.... All of this essentially made it impossible for them to set up stores with stocked shelves.
If you read the article, their warehouses were so overloaded with stock that they had to rent 3rd party storage lots/yards in order to deal with it. Their business intelligence (lol) was just so screwed up that they just had no idea what was in the boxes, where the boxes were, and what stores needed to have sent out to them.
Sounds like a classic case of expensive consulting firms (SAP, Accenture, Retaxia) overselling an incomplete solution/product to a desperate buyer and the classic failure of management and integration to the tune of several billion dollars.
Our company did the same thing last year with an oil & gas marketing system that the consultants/vendor sold on false promises, came in unfinished, failed to work, wasted a million dollars, and everybody went back to spreadsheets and the system was deleted.
Last edited by Hack&Lube; 01-22-2016 at 03:19 PM.
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And then Accenture's take on it as a successful SAP implementation. Crazy.
My guess to Accenture's unofficial position (based on the article) "Hey, we gave you a working SAP install, you chose to populate it with horseshinguard data and disable key controls around stock levels"
Surprised the article didn't touch on the fact that many Canadian target shoppers were expecting American target inventory at American inventory prices.
Target also is popular in large part to their ladies fashion offerings. It pulls ladies in, who do the family spending. I don't think they recreated that here.
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The parent company guaranteed a lot of the leases in exchange for landlords helping out on renovation costs. So if they came back and said "we need a price break" the answer they'd get would be "go bankrupt and we'll collect from Target USA, don't let the door hit you in the ass on the way out."
It's holding up their CCAA right now, Target wants the landlords to give up the right to collect from the parent, which they've said they won't do. The judge threw out their first restructuring plan right away.
A lot of those guarantees were only for the first 2-3 years, not to mention some of the landlords also believed that target would become an actual anchor tenant acting as a draw to their respective centres, so the "don't let the door hit you..." certainly wasn't the case, especially given the reaction of the leasing guy for one of the nations biggest retail landlords.
Additionally no one wants to be in the situation you described as happening. It's a pain for your shopping centre, for your other tenants, for your debtors and it's expensive to deal with.
If you read the article, their warehouses were so overloaded with stock that they had to rent 3rd party storage lots/yards in order to deal with it. Their business intelligence (lol) was just so screwed up that they just had no idea what was in the boxes, where the boxes were, and what stores needed to be sent to them.
Sounds like a classic case of expensive consulting firms (SAP, Accenture, Retaxia) overselling an incomplete solution/product to a desperate buyer and the classic failure of management and integration to the tune of several billion dollars.
Our company did the same thing last year with an oil & gas marketing system that the consultants/vendor sold on false promises, came in unfinished, failed to work, wasted a million dollars, and everybody went back to spreadsheets and the system was deleted.
I read the article. They also say the biggest mistake they made was initially spending so much on the property to begin with. The warehouses were also the planned destination of the goods that were to then be distributed to the individual stores.
While I don't dispute that the management was at fault and should have seen things coming, a major issue for them was that they assumed business in Canada would operate like it did in the US.
What allows target to thrive in the US is their ability to provide a vast variety of goods at a reasonable price. Good luck with that in Canada. Nothing is a reasonable price and our access to goods is extremely limited. A major point in the article is the inability to quickly negotiate feasible prices and delivery methods with Canadian suppliers. This is an ongoing issue as many products are controlled by inept companies with absurd distribution licenses.
While the management is obviously at fault for not dealing with those issues prior to the launches, the other issue becomes should those hurdles in Canada have existed in the first place?
I read the article. They also say the biggest mistake they made was initially spending so much on the property to begin with. The warehouses were also the planned destination of the goods that were to then be distributed to the individual stores.
While I don't dispute that the management was at fault and should have seen things coming, a major issue for them was that they assumed business in Canada would operate like it did in the US.
Inventory doesn't do you any good in a warehouse, and in fact cost quite a bit to hold prior to being shipped to stores. So not only are you not getting sales because you don't have the inventory in stores, you're paying for storage to hold the inventory. Also, with large retailers you're not usually actually paying for inventory until a few months after it has delivered, so you've had an opportunity to sell the majority of said inventory before you have to make payments to the vendor. All of this adds up to a lot of cash going out the door without enough coming back in to balance out.
This is why these systems that they invested so much in are so extremely important. Any strong retailer does a good job of flowing inventory in in a way that maximizes sales and avoids holding unsalable inventory, which is what these systems are designed to do.
Also, I think the general public had a completely unrealistic view of what to expect in regards to pricing. People expected Target to sell at the same prices that they do in the US, which was totally unfeasible. I shopped at Target quite a bit while they were open and found that the prices were very comparable if not cheaper than Walmart in the majority of cases, but like I said, people had unrealistic expectations, and when the shelves are empty the first 2 or 3 times you shop there, you're unlikely to go back which really hurt initial impressions.
Was it Target or WalMart that built a huge distribution centre out in Balzac? If it was Target, what happened to that warehouse? Is it just sitting empty or has someone picked up that property?
Was it Target or WalMart that built a huge distribution centre out in Balzac? If it was Target, what happened to that warehouse? Is it just sitting empty or has someone picked up that property?
Both companies built one - not sure what became of the Target one.
