Why American Retailers Are Striking Out In Canada

Target announced it is pulling out of Canada after losing more than $2 billion. Meanwhile, electronics retailer Sony is closing all 14 of its Canadian stores.

So what is going wrong in Canada?

The struggling Canadian retail market is "a recipe for disaster" for companies like Target, Doug Stephens, founder of industry website Retail Prophet and author of "The Retail Revival: Re-Imagining Business for the New Age of Consumerism," told Business Insider.

The slump in oil prices has "cast a dark shadow over the country's economic prospects," according to The Globe And Mail. Major cities like Alberta and Calgary are driven by the commodity industry.

Poor consumer confidence is also hurting the Canadian housing market.

And at a time when consumers are increasingly unwilling to spend, Target and Sony didn't do enough to entice them, Stephens said.

Target Canada was plagued by empty shelves and poor customer service. The retailer also built stores in less-than-ideal areas, and consumers didn't feel compelled to make the trip.

"Target busied itself making excuses and creating ad campaigns to convince Canadians that things were getting 'better each day,' when in fact they really weren't improving nearly fast enough," Stephens said.

"They simply didn't bring the Target experience to Canada," he said. "Canadian shoppers voted with their wallets."

Sony also struggled to find footing in Canada.

The biggest issue with the electronics retailer, according to Stephens, was that it never identified its niche in the highly competitive tech space.

"Sony is losing position as an innovator in the consumer electronics space," Stephens said. "They found themselves being neither the Apple store nor Amazon and that's a pretty uncomfortable position to be in."