Within less than two years after expanding its business into Canada, Target failed. In the year 2015, Target accepted defeat and ended up closing its door with a loss of$2billion. The situation resulted in the loss of about 17,000 jobs (Novack, Coyle, Bardi & Gibson, 2011). The failure of Target came at a time when its competitor Costco was growing its Canadian base in an increasing manner. The question, which now lingers in the mind of many, is what went wrong for Target and what led to the success of Costco. Moreover, they consider whether these foibles and forays give insights into what is required to have an efficient supply chain.

The failure and success of Target and Costco can be related to the failure or success of supply chain. The technological inadequacies such as U.S custom built tracking systems for merchandise failed to work in Canada (Novack, Coyle, Bardi & Gibson, 2011). In this context, retail outlets and distribution centers failed to communicate adequately making it impossible to know what was needed for the retail stores and retail outlets and what products arrived at the distribution stores. In the end, many stores were left empty. For Costco, it implemented a gradual development strategy, which provided the retailer with the necessary time to developing an efficient supply chain. This strategy depends on a distribution system that consolidates goods shipped from manufacturers and loaded for distribution to various outlets. The approach adopted by Costco has enabled it to keep the operating expenses at low levels while it can maintain efficiency in the supply chain (Dawar & Stornelli, 2013).

Conclusion

Point to note is that many consumers are not ready to give a second chance. Customers became disappointed when Target could not provide adequate inventory, as many shelves were empty. They would even complain of inadequate options and a point of sale that was dysfunctional. After unpleasant shopping experiences, most of Target’s customers left and built their loyalty on Costco since Costco provide an adequate selection. In addition, it pays any business to know its customers. Costco had been operating for more than 30 years, and it was able to make decisions on how and where to expand its business.

References

Dawar, N., & Stornelli, J. (2013). Rebuilding the relationship between manufacturers and retailers. MIT Sloan Management Review, 54(2), 83-90.

Novack, R. A., Coyle, J. J., Bardi, E. J., & Gibson, B. J. (2011). Transportation: A supply chain perspective. South Western Cengage Learning.

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