Target Canada: Lessons Learned on Trust-Building

June 25, 2015
Mark Gregory

In March 2013, Target, one of the North America’s largest retailers, trumpeted its entry into the Canadian marketplace. Just two years later, Target abruptly closed its 133 stores across the country and put 17,600 Canadians out-of work; leaving shattered lives and stunned suppliers in the wake.

Simply put, Target failed to keep its brand promise to Canadians to ‘expect more and pay less’. Sadly, Target wasn’t the only enterprise that failed to live up to its brand promise. One month earlier, Edelman PR shared the results of its 2015 ‘Trust Barometer’ than showed global trust in business continues to fall. In Canada now, less than 50 percent of people place their trust in corporations.

Target’s collapse in Canada offers invaluable lessons for Boards of Directors, CEO’s and public relations professionals on the important connection between transparency, trust-building and business success.

Lesson one: Trust, like reputation, is a precious corporate asset. Consumers give corporation’s a ‘social licence to practice or operate’ when they view the company as open, honest, and ethical. Cone Communications’ 2013 research found 90 percent of consumers surveyed are more likely to trust companies with a commitment to social and environmental action; purchase from them and refer them to others. A February 2015 Huffington Post story found that 55 percent of global consumers are willing to pay more for products and services from companies that are committed to positive social and environmental impact.

Trust is a powerful ‘competitive edge’. Companies with a ‘Triple Bottom Line’ of people, planet and profit that drives ‘values-based decisions’ are winning the trust and the business of today’s ‘social consumers’. This strategy positions them to attract, recruit and retain talented younger generations who seek employers whose actions align with their personal values.

Lesson two: ‘Openness’ is key to business success and trust. ‘Openness’ means companies keep an ‘open-mind’ as they balance their interests against those of their stakeholders. Open companies are honest and transparent with consumers and the community. They listen to all their key stakeholders, anticipate their needs and responses, and understand their concerns. They also leverage the invaluable intelligence that employees gain while interacting with customers and their families on behalf of the organization. If Target had practiced ‘excellent two-way communications’ with staff, and had listened and acted on concerns about Target’s pricing strategy, supply chain, merchandising and marketing; one can’t help but think this could have made the difference between success and failure. It would seem that Target came to Canada with all the answers. The lack of openness left them in a largely reactive stance that fueled their failure. So much potential and yet, so little to show in the end.

What stops us from getting into a dialogue with our stakeholders and understanding their world and sharing our perspective as well?

Lesson three: Without a perception of ‘fairness’, trust flounders. Just because a company’s actions are legal, does not make them right in the court of opinion of social society. If a company aspires to a ‘good and ethical’ reputation, its decisions must be seen as respectful and fair to its stakeholders. Target Canada’s choice of Canadian bankruptcy protection, positions its U.S. parent company’s interests ahead of the suppliers who, in good faith, did business with Target Canada. Canadians are raised to seek fairness even if it means we need to compromise more often than we’d like to do so. It’s one of our core values and to misunderstand this central piece of the puzzle means that Target corporate really didn’t know us.

Ultimately, Target’s drive to squeeze every dollar from the ash-heap left behind in Canada, might be viewed as smart business in some quarters, but it only serves to build further ill will amongst employees past and present, consumers and suppliers.

Lesson four: Never forget the power of research and analysis in business and PR. What killed Target is what they did not know, and failed to act upon. Public relations managers must take a stronger leadership role is helping their company to navigate the marketplace successfully.

Did PR do its job? One wonders: If the PR staff had suggested research and other ways to understand stakeholders better, would the leadership have listened and changed their plans to incorporate and make space for other’s thoughts and ideas?

Highly skilled PR pros employ the RACE approach to communications strategy and management, and they utilize a good network of relationships with all stakeholders to help their company to adapt and adjust actions and messaging. As Nike’s tagline says; ‘Just Do It!’