Target Corp. has replaced the leader of its struggling Canadian division with another of its senior U.S. executives amid signs that customer satisfaction with its stores continues to slide.
Target of Minneapolis said on Tuesday that Tony Fisher, its president in Canada, was leaving immediately and that Mark Schindele, senior vice-president of its U.S. merchandising operations, is taking his place.
The company said it plans to name a business person with Canadian experience to a new non-executive chairperson position to advise Mr. Schindele.
The new leadership faces mounting shopper dissatisfaction, a poll conducted for The Globe and Mail indicates.
Just 18 per cent of customers said they were “very satisfied” with the stores, down from 27 per cent last August and from 32 per cent more than a year ago, when the U.S. retailer arrived to much hype and high expectations.
“It’s an abysmal rating,” said Lorne Bozinoff , president of Forum Research, which conducted the research.
“It was already bad and it’s just gotten worse. They really have to do a concentrated effort on turning things around.”
Target Canada has suffered from empty shelves, inadequate distribution systems and complaints that its prices are too high, racking up an operating loss of almost $1-billion (U.S.) in its first year in Canada.
On May 5, the parent company’s chief executive officer, Gregg Steinhafel, stepped down as the retailer struggled with less traffic to its U.S. stores, lagging e-commerce business, and the fallout from a massive data breach.
In Canada, the retailer risks being unable to respond to distinct buying habits without more top leaders who have deep knowledge of the Canadian market, industry observers warn. Others suggest that creating a non-executive chairman position is simply “window dressing.”
“They absolutely need more Canadian input,” said Luke Sklar, partner at retail consultancy Sklar Wilton & Associates Ltd.
He said Target could have benefited from a seasoned Canadian retailing executive taking over the top job. “If I didn’t respect them so much, I would say not only are they making the same mistake, they are on a path to doom. Best case, this will cost more and take longer than Minneapolis wants.”
Target, which reports its first-quarter results on Wednesday, has placed Canadians in two of five of its top positions in Canada, spokeswoman Dustee Jenkins said in an interview. The new non-executive chairperson will also be Canadian, she said.
“We are looking for an experienced leader, someone who is strategic, someone who can help us connect the dots in Canada, someone who can help ensure we get it right,” she said. “Certainly we are looking for someone with deep expertise of the Canadian market.”
She said the retailer is not necessarily looking for a chairperson with retail experience, but will move quickly to fill the position. The chairperson will not sit on Target’s board of directors.
Ms. Jenkins said Target’s own customer surveys have shown improvements, although more work is needed. “We recognize that we were really aggressive in opening 124 stores in our first year,” she said. “While that is no excuse, we have let some of our guests down. We are also impatient – we want to see progress.”
Perry Caicco, retail analyst at CIBC World Markets, said in appointing “another American in-house solution,” Target is signalling it may not understand “the massive disconnect it has with Canadian consumers.” But the company will likely appoint a “Canadian big name” as the non-executive chairperson, he said, which could become increasingly an executive role.
Mr. Caicco said at least two Canadians are in the running for the new CEO job. Some analysts have suggested that Glenn Murphy, CEO of Gap Inc. and a former leader of Toronto-based Shoppers Drug Mart Corp., or John Lederer, a former president of grocer Loblaw Cos. Ltd., could be considered.
Others have suggested candidates could include retail veterans Bonnie Brooks of Hudson’s Bay Co., Mario Pilozzi, a former Wal-Mart Canada president and Annette Verschuren, former head of Home Depot Canada. None of them has yet been approached for the chairperson’s job.
Antony Karabus, CEO of Hilco Retail Consulting, said Target made a good decision in naming an experienced merchandising person as Canadian president. He said Mr. Schindele will need to focus on the basics of getting products onto store shelves rather than glitzy marketing initiatives, such as rebranding a boutique hotel to its own name during the Toronto International Film Festival.
With files from reporter Bertrand Marotte in Montreal