Category: Credulous reporting

From the annals of credulous reporting … is it reasonable to believe these empty shelves are actually typical of Target stores in Canada? The general reason Target is closing is they looked at the potential returns in the market and saw a loser because the stores already there were capable of competing on price … and were doing exactly that. Another reason is pretty obvious too: think about the Canadian dollar. It’s currently worth 84 US cents. Now think about what that means for the supply chain: the more you bring in from the US, the more you have to charge for it (because what it costs in US dollars is more than what it costs in Canadian dollars). So you need to develop a separate supply chain, which is expensive and which your rivals already have. And that supply chain has to cover a huge area. And that doesn’t eliminate the exchange rate risk. And lastly, think about the size of the Canadian market: 35 million total coast to coast, with about ⅓ in Ontario. The entire market is smaller than California and the largest part of that is smaller than the NYC Metro area. I think it’s safe to say companies in the US do fine without competing in CA and/or NYC. So the business decision would come down to small, extremely spread out market where you face price competition rooted in expensive supply chain management and where there is big currency exchange rate risk.