From truck drivers to toymakers, companies around North America are still reeling from the ripple effects of Target’s mega failure in Canada.
The cheap-chic retailer announced plans to ditch its 133 stores in January after its newly-appointed CEO realized he wouldn’t be able to turn around Target’s only foray into non-US territory. It has already recorded losses of more than $5 billion on the closures.
The company failed to live up to expectations of Canadians who expected the cheaper prices and products they had previously seen in the US—like Cherry Coke and peanut butter M&Ms.
But the effects of its store closures continue to wreak havoc across a wide range of companies.
There are “some larger shock waves emanating from the Target closure, as you might imagine, so that’s causing some knock-on effects that we’re still sorting through,” Douglas Murphy, CEO of Canadian media and broadcasting company Corus Entertainment, told analysts earlier this year.
Canada’s largest retail landlord, RioCan, put it more severely: “You bet there have been challenges. I can sum up a lot of those challenges in the phrase Target Canada,” RioCan board chair Paul Godfrey said at a shareholder meeting in June.
Target was one of RioCan’s largest tenants, representing 2% of its revenues. “Closing 133 stores that they had just spent several billion dollars establishing, and on the way out throwing 17,000 people out of work, we have to admit, it took us by surprise,” RioCan CEO Edward Sonshine told shareholders.
“Dealing with about 2 million square feet of space essentially all at once is both extremely time-consuming and all-encompassing,” he said.
To be sure, high-tailing it out of Canada quickly was the right thing to do for Target— the retailer wasn’t going to be able to right its missteps quickly and Canada’s economy is hurting.
And while some companies suffer, others will benefit: Retailers including Lowe’s, Walmart, and Canadian Tire are picking up extra retail store locations and sales from their former competitor.
But the residual effects of Target’s decision continue to play out across dozens of manufacturers and service providers who were counting on Target’s growth to help them boost sales.
Hasbro, the maker of Monopoly and My Little Pony, complained this week that Target’s January decision to close up shop in Canada weighed on its sales growth. TransForce, a truck driver staffing agency, groused over the loss of one of its largest accounts. Starbucks bemoaned the shuttering of more than 100 licensed locations in Target stores. And Target’s ATM-provider, DirectCash Payments, said it took a hit.
Even Dollarama, Canada’s largest dollar store chain and a Target competitor, said it’s seeing sales declines at stores located near Target stores, as shoppers flock to liquidation sales. Dollarama CEO Laurence Rossy said he’s hoping the next retailer that takes over Target’s retail store locations in Canada will drive more traffic to the shopping centers than flailing Target did.