Taghit, A Discount Retailer, Is Pulling Out Of Canada.

"Simply speaking, the Canadian branch is losing money every day," said Brian Connell, CEO of Taghit. "After calculation, we find that if we want to make profits, it will be the earliest in 2021."

Therefore, in January 15, 2015, Taghit announced that it should withdraw from the Canadian market.

In terms of business data, although Canadian sales in the third quarter of 2014 hit a new high of US $479 million, an increase of 43% over the same period last year, however, its operating loss reached US $211 million, down 12% from the same period last year.

As a result, it is estimated that its revenue per square foot is only $140, while the cost is nearly $300, which is only a break even point.

Therefore, Scott Maskin, an analyst with Wolf research group, said that if Taghit wants to achieve breakeven point, it must be able to grow at least 21% a year in the next few years. This data is almost impossible to achieve in the current store.

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Location and location are the core of all, because this has a great relationship with the target population of the shop.

In fact, more than 120 of Taghit's 133 stores in Canada were bought from Zellers, a local discount store in Canada in 2013. Although it seems that Taghit has entered the Canadian market directly, there are many problems in these stores.

The problem is that although the number of stores is huge, its location is basically near the low end consumer area, far from the traditional location of Taghit, the middle class customer.

And on the whole, these shops are not suitable for Taghit's image from design, although the purchase price is only 1 billion 800 million dollars, but it greatly affects the image of Taghit.

As a result, the traditional image of these shops redecorating them is a lot of money.

Culturally speaking, Canada and the United States are very similar, so that after entering Canada, Taghit does not have to face the operational risks brought by culture. However, Taghit is not facing cultural differences in Canada.

The difference between the two countries lies in their population: about 320 million people in the 9 million 620 thousand square kilometers of the United States, 33 people on average per square kilometer, and only 35 million 500 thousand people in 9 million 980 thousand square kilometers of land in Canada, which means that there are only 3.5 people on average per square kilometer in Canada, which is only about 1/10 of that in the United States.

That is to say, even from the perspective of population, Canadian stores can be quite "empty" compared with Taghit in the US.

Therefore, from the cost point of view, the cost of 1 Canadian customers per service is almost 10 times that of American customers.

So, before Christmas in December 2014, CEO Connell himself visited the shops in Ottawa and Quebec, Canada, which are all the most densely populated areas in Canada.

The management of the same business said, "these shops are almost deserted. In normal terms, the Christmas season should be the most popular."

And all the shops he saw were merchandise stocks.

Connell said, "the Christmas season should be the busiest. We measured the data in the fourth quarter, but unfortunately we did not see much change."

Moreover, compared to the US market,

The electricity business in Canada has almost never been launched. This is an important way to attract customers in the physical retail industry under the impact of the electricity supplier. However, Taghit has not seized this point.

As a discount retailer, Taghit's competitors are never weak: WAL-MART, Costco and so on. These are the top ten retailers in the world.

In Canada, the problem is even more serious, and a large number of local retailers have become competitors in Taghit.

In comparison, consumers find that Taghit's goods are more expensive, while at the same time the quality is only at the same level as other retailers.

Moreover, when Taghit entered Canada, WAL-MART launched a price war directly. Taghit, which was totally unprepared, was almost defeated in the competition.

Though Taghit is fast

Business has been carried out, but its supply chain has not kept up with demand. After all, the pressure on supplying more than 120 shops is enormous: many Canadian consumers often cross the border of the two countries and come to Taghit stores in the United States to purchase.

But when Taghit came to the door, Canadian customers found that shelves were often out of stock - almost all products were out of stock.

What is more interesting is that consumers find that although their favorite products are discounted on the price tag, they are empty on the shelf, while those very ordinary goods are not only expensive, but also full of shelves.

In addition, from the product itself, there are almost no stores in Canada that have unique brands and private brands.

A manager in Taghit (Canada) mentioned in an email to a well-known blog website, Gawker, that as a shop manager, he could not even tell the logistics center what products his shop needed every day. "If the eggs and milk sold out, we can only be resigned to it, expecting that the second day truck can bring them."

At the same time, according to the management standard of Taghit, every shelf has nothing to prevent. Therefore, if there is no commodity, the shelf can only be "vacant" there.

In the end, this led to the fact that Taghit was not only short of stock but also unable to compete with its rivals in price.