Shoppers at Target Corp.'s new Canadian stores encountered empty shelves this week as frenzied employees struggled to replenish merchandise.
The Minneapolis-based retailer initially opened three "pilot" stores in Ontario about two weeks ago and quickly encountered shortages of milk, clothing and other items. The problems appeared to persist after Target opened 17 more stores Tuesday throughout the Toronto metro area.
"They got some serious holes," said Doug Stephens, a Toronto-based retail consultant. Stephens tweeted a photo of bare shelves at a Target store he visited Friday in Aurora.
Target is trying to work out the kinks during a "soft launch" before the company opens the rest of its 124 stores throughout Canada this year, said spokeswoman Donna Egan. Target did not make an executive available for comment.
"We're still in the process of fine-tuning our stores as we receive guest feedback and learn more about how Canadian guests shop the stores, and we will continue to do so as we approach grand opening in early April," Egan wrote in an e-mail. "We are asking guests to be patient as we finalize our merchandise and put the finishing touches on our stores."
Target has a lot riding on its Canadian expansion. Wall Street has pushed up its stock in recent weeks as analysts anticipate Canada to significantly boost Target's profits and cash flow at a time when the American shoppers remain somewhat tentative.
Judging from news reports and social media, it seems that many Canadian shoppers have already embraced Target's entry into the country.
"Overall the soft openings to date have been met with tremendous success and have produced valuable insights that will help us determine store readiness … when we open our doors at other locations across Canada," Egan wrote.
The initial shortages present a sort of good news/bad news dynamic for Target. On the upside, Canadian shoppers were clearly ready to buy Target merchandise. "We definitely were slammed," John Morioka, Target Canada's senior vice president of merchandising, told a local newspaper this week. "We thought there would be an initial bump. The bump has not leveled off to the degree that we thought."
However, this is the first time Target has expanded into a foreign country. Empty shelves do not convey a good first impression, especially with some consumers unfamiliar with Target, Stephens said.
"You want to put your best foot forward," he said.
Canada's large size and dispersed population poses a host of logistical challenges, even for the most experienced retailer. Perhaps mindful of this, Target recently decided to take ownership of three Canadian distribution centers they built in 2012 rather than lease them. The company also will add 15,000 square feet to 40 planned store locations by leasing adjacent space.
Thomas Lee • 612-673-4113
