Location autopsy: 5 'perfect' retail spots that killed businesses
And the 3 Warning Signs You Must Know
Listen up. I'm about to show you how billion-dollar companies with "perfect" locations burned through fortunes faster than a warehouse fire. These aren't small-time failures—these are Fortune 500 disasters that should keep every executive awake at night.
The brutal truth? Location isn't just about foot traffic and parking spaces. It's about strategic positioning, operational capability, and market reality. Get it wrong, and you'll join the corporate graveyard faster than you can say "lease agreement."
Case study #1: Target Canada - the $2.5 billion meltdown
The "Perfect" Setup
Target had it all: 124 prime retail locations across Canada, acquired for $1.8 billion from Zellers, with plans to be profitable within the first year. These weren't random strip mall spaces—these were established retail locations in major Canadian markets.
The Execution Disaster
Target opened 124 stores in just two years while building three distribution centers—a feat that typically takes years per center. The result? $2.1 billion in losses and what CBC News called a "spectacular failure" and Maclean's magazine termed "an unmitigated disaster".
What Killed Them
Speed over strategy. The company was paying rent on stores that weren't operational, forcing them to open as quickly as possible. Their SAP inventory system failed catastrophically, leaving stores with empty shelves during peak seasons. Supply chain problems were blamed on using brand new software without sufficient time for staff to work out the system's problems.
The smoking gun: Canadian Target stores did not have local authority to order their own merchandise, resulting in Windsor stores stocking Toronto sports team apparel instead of Detroit teams, despite Windsor's proximity to Detroit.
Case study #2: Toys"R"Us - the category killer that got killed
The "Perfect" Setup
866 stores in the United States and more than 750 international locations. Toys"R"Us was the undisputed king of toy retail, a "category killer" that dominated through volume and variety. By 1983, revenues topped $1 billion, reaching $1.3 billion.
The Execution Disaster
The company filed for Chapter 11 bankruptcy in September 2017 after years of slipping sales and mounting debt. KKR, Bain, and Vornado acquired Toys"R"Us in 2005 for $6.6 billion, loading it with $4.9 billion in debt.
What Killed Them
Financial engineering over customer engineering. The interest rate on debt was around 7.25%, creating payments of $450 million per year on interest alone. The company was paying $400 million annually in interest, in addition to millions in dividends and management fees paid back to its owners.
The brutal reality: They even cut back on floor care—stores used to be buffed once a week, then every two weeks, then once a month. Floor polishing, parking lot sweeping, painting—anything that could be cut as an expense saving measure was cut.
Case study #3: RadioShack - the death of "america's technology store"
The "Perfect" Setup
RadioShack once bragged that 90% of the U.S. population lived or worked within minutes of a RadioShack location. The chain had about 5,200 stores and 27,500 employees as recently as 2014.
The Execution Disaster
RadioShack filed for bankruptcy twice—in 2015 and 2017. After the second bankruptcy, it expects to operate primarily as an online retailer with up to 28 company-owned stores and annual revenue of about $12 million to $17.5 million.
What Killed Them
Location density became a liability. As Americans turned to online shopping, that network of stores went from a strategic benefit to an expensive burden. Sales had fallen for nine straight quarters, and the company realized a loss in each of its 10 latest quarters.
The partnership trap: Sprint sales dropped during the fourth quarter of 2016 and it became apparent RadioShack would not receive expected revenue from mobile commissions.
Case study #4: JCPenney - the rebranding catastrophe
The "Perfect" Setup
JCPenney had hundreds of anchor locations in malls across America. In 2011, they hired Ron Johnson, the genius behind Apple's retail success, to transform the business.
The Execution Disaster
Comparable sales in 2012 fell a vertigo-inducing 25%. Penney posted net losses of $795 million in 2012, $1.3 billion in 2013, and $717 million in 2014.
What Killed Them
Alienating the core customer. Johnson misread what customers wanted—lower middle-class women, mostly mothers looking for great deals, were alienated by the new retail environment because it was different in how it looked, sounded, and felt.
Case study #5: Blockbuster - the location king dethroneD
The "Perfect" Setup
Blockbuster was once a juggernaut, with over 9,000 stores worldwide. Prime real estate in every major market, with the convenience of physical movie selection.
The Execution Disaster
The rise of streaming services like Netflix and Hulu led to Blockbuster's demise. The company was slow to adapt to the changing market, and by the time it did, it was too late. Blockbuster filed for bankruptcy in 2010, and its last store closed in 2013.
The 3 critical warning signs you cannot ignore
Warning sign #1: The speed trap
If you're expanding faster than you can operationally execute, you're not growing—you're hemorrhaging.
Target Canada's lesson: Target's scale was too large, the timeline was too aggressive, and as a consequence, Target was unable to efficiently manage the whole supply chain, resulting in an unpleasant shopping experience for customers.
The executive action: Before signing that next lease, ask yourself: "Can we operationally deliver excellence at this pace?" If the answer isn't an immediate "yes," you're about to become a cautionary tale.
Warning sign #2: The debt burden death spiral
If you're spending more on interest than innovation, you're already dead—you just don't know it yet.
Toys"R"Us reality check: If you're diverting your cash to make interest payments, that's money you're not spending on something else. Cash flow is oxygen—without it, you cannot survive, let alone innovate and grow.
The executive action: Calculate your annual interest payments against your innovation budget. If debt service exceeds customer experience investment, you're financing your own funeral.
Warning sign #3: The competitive displacement delusion
Having the "perfect" location means nothing if perfect competitors are redefining the game.
RadioShack's reality: The plan was to reinvent the once-booming retail electronics business to compete in a market that has increasingly leaned toward online retailers. They failed because they tried to compete in yesterday's game with yesterday's rules.
The executive action: Stop asking "How do we get the best location?" Start asking "How do we make location irrelevant to our customer's success?"
The bottom line for leaders
These failures weren't accidents—they were the predictable result of strategic arrogance and operational incompetence. Nick Egelanian of SiteWorks gives a regular presentation on the biggest mistakes in retail history, and he thinks some of the biggest retail failures boil down to "believing your own hype" and the isolation of leaders from criticism.
Here's what separates winners from casualties:
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Operational Excellence Beats Prime Real Estate - Target Canada had great locations but couldn't stock the shelves. Excellence in execution trumps excellence in location every single time.
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Financial Discipline Creates Strategic Options - Toys"R"Us had to cut floor maintenance while paying $450 million in annual interest. When you're financially constrained, you're strategically dead.
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Market Evolution Beats Market Position - RadioShack owned the electronics retail market until the market moved online. Your position in a dying market is worthless.
The companies that survive aren't the ones with perfect locations—they're the ones with perfect execution, financial discipline, and strategic agility.
The choice is yours: Learn from these billion-dollar failures, or become the next cautionary tale.
The next time someone pitches you on a "perfect" location, remember: perfection is in the execution, not the address.