Jon A Goad
Oklahoma Christian University
The purpose of this paper is to summarize the considerations that Target Corporation must take into account to determine the market feasibility of opening gourmet restaurants inside its stores. A brief history of the corporation will provide the reader with some general information about the company’s early years. A situation analysis will then address much of what the Marketing Department must consider, including trends, product life cycle stage, opportunities and threats, as well as potential strengths and weaknesses. The paper goes on to discuss Target’s customer profile, and how that will be a determining factor in the decision. A summary concludes the paper by discussing a couple of options, why they should or should not be considered, and what the author thinks is the best option in the current environment.
Background of Target Corporation
Target Stores, since its founding in 1962,
has been a dynamic leader in the American retail industry. A division of Target Corporation, its office is headquartered in Minneapolis, and the company currently operates over 1,700 stores in 49 states with over 355,000 employees (http://sites.target.com). It is known, along with Wal-Mart and K-Mart, as one of the “Big Three” in US discount retailing. The company is known for its offerings of brand-name merchandise at discounted prices, and its famous “bulls-eye” logo is indeed synonymous with the idea of bargain shopping. A look back at Target’s early years indicates that the chain had anything but humble beginnings. Dayton’s department store chain, during the early 1960’s, was looking for ways to re-emerge as a top retailer, as well as to enhance the shopping value for its customers. So it began moving towards a new concept at the time: mass-market retail. The idea was to combine the fashion, quality, and service of a department store with the value of discount stores to create a “super-store.” Although that label did not stick until decades later, it is essentially what was born out of this idea. The first store opened in Roseville, Minnesota during spring 1962, and by the end of the year Target had opened 3 more locations in the Minneapolis area. Throughout the 1960’s and 1970’s, the chain grew to 74 stores in 11 states, and in 1979 celebrated for the first time achieving the milestone of $1 billion in annual sales (http://sites.target.com). In 1994, the retailing giant unveiled the trademark slogan that remains today: “Expect more. Pay less.” The slogan exemplifies the company’s drive to offer guests value, quality, and great service.
Trends: Wal-mart has agreements with multiple food-service chains to operate within its stores, including McDonald’s, The Taco Maker, Subway, and Fazzoli’s. K-Mart Corporation typically will have an in-house deli in its stores, and many have agreements with Little Caesar’s Pizza.
Many of these in-store food service venues are profitable. Bill Lowery, McDonald’s vice president in charge of company owned Wal-mart stores states that the Wal-Mart-based McDonald's "remain very strong, are profitable and continue to grow” (Dow Jones News). Additionally, a Wall Street Journal article notes that within three years Subway has gone “from a lone restaurant inside a Wal-Mart in Ozark, Ala., (it) has quickly overtaken McDonald's as Wal-Mart's primary fast-food concessionaire across the United States” (Wall Street Journal). It is highly unlikely that Subway would continue to open more Wal-mart venues if they were losing money.
Stage in industry/Product Life Cycle: Although the concept of having an in-store restaurant is not new, the life cycle for this particular product would seem to be lengthy. Customers will continue to shop at discount retailers for the foreseeable future, and the opportunity to offer food service will remain as...
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