What ails Target stores in Toronto?

In the days following former Target CEO Gregg Steinhafel's departure, there's been plenty of talk about the grim state of the retailer's Canadian operations, which reported a nearly $1 billion loss loss in 2013. Some have even gone so far as to speculate that Target will close up shop in Canada altogether, though that seems a bit premature at this point. So what the hell has gone so wrong?

One of the problems that's got a lot of airtime is inventory issues, or rather, lack of inventory. Reports of stores with empty shelves have been widespread since the chain opened, which has frustrated customers. Along with having (typically) less stock than their US counterparts, Canadian Target locations have also been criticized for higher prices than what many anticipated.

These are all significant factors contributing to the slow start, but perhaps the most interesting one from a Toronto perspective is the subject of a recent Reuters article, which suggests that Target's decision to occupy former Zellers locations in "down-market malls rather than up-and-coming retail locations... Target's Canadian woes began with that footprint, while the company's inability to stock the stores with items Canadians want at the prices they expected is what ultimately alienated customers."

It's an interesting theory, and one that's at least anecdotally supported by the warm reviews the new Stockyards location of the chain has received. Zellers died for a reason, and it's tough business when you're thought of as its ghost. Perhaps a few more of these massive downtown locations are just what the retailer needs to help restore its image?

Photo by Greg's Southern Ontario on Flickr