Target Corporation is the second largest retailer in the U.S. with over 1700 Target and Super Target stores. Targets around the country offer everything from household essentials to computer software to groceries, and sell many of their products under private label brands. In addition to their retail segment, the company also offers credit and debit cards to its frequent shoppers. In our report, we analyze company's past and present performance through a thorough study of Target's brand, their accounting disclosures and overall financial performance. Based on our findings, we suggest that the company:
Continues to expand its private label offerings
Considers relocating the grocery section to the rear of the PFresh stores Explores expanding its operations to Canada
The Target Brand
In 2002 the Minneapolis-based Target Corporation became the United States second largest discount retailer behind Wal-Mart. According to “Simply Better” from the Harvard Business School Press, Target‟s success can be attributed to two key factors: the right kind of differentiation and distinctive marketing communications. Target positioned itself as a mass merchant selling affordable yet stylish goodsi (Appendix 1).
Today Target has transformed its signature bulls-eye logo into a lifestyle symbol. The bulls-eye is recognized by 96% of American consumers and considered a brand icon in a class with Nike's swoosh and McDonald's arches.
ii This was accomplished through a strong commitment to advertising to build an iconic brand. Target has reportedly spent 2% of its revenue in advertising compared to 0.4% spent by Wal-Mart or 5% spent by Macy‟s in 2009.
iii Additionally, Target shows its commitment to building a chic brand by offering exclusive lines in partnership with well-recognized designers. Target is no stranger to providing top 4 designer labels without the ready-to-wear prices. Past and current partnerships include, Isaac Mizrahi, JeanPaul Gaultier, Anna Sui, Todd Oldham, Zac Posen and the late Alexander McQueen. These partnerships have proven profitable as customers flock to secure items from these designers at prices they can comfortably afford. Most recently, Target has aligned with the Gilt Groupe, an online retailer that commercializes premium brands at discounted prices, to offer select lines for limited periods of time. "The Guest"
Target customers, referred to as “The Guest” are on average younger, well-educated and affluent. According to Target, the shopper is predominantly female with a median age of 42, a median household income of approximately $60,000, 51% have completed college and 33% have children at home. Target's Competitors
Target faces strong competition from wholesalers such as Walmart and Cotsco as well as department stores like Macy‟s and Sears Holding Company. Nevertheless, it has secured a strong position in the market, holding a 33.4% department store market shareiv while the Super Target represents 3.8% of the Warehouse Clubs & Super Centers in the USv
Expect More, Pay Less
With its “Expect More, Pay Less” brand promise, Target has historically positioned itself at a slight price premium over its competition. Through creative, thoughtful campaigns such as “Design For All,” Target incorporated fashion, trendiness and value into its messages. This approach supported the full “Expect More, Pay Less” brand promise and served to build a cheap-chic, class-to-mass image for Target (Appendix 3). As a result, Target carefully carved out a niche for itself as the upscale discounter wherein it was able to pull up bargain-hunting consumers from the low cost mass merchants and also lure fashion and designconscious clientele away from specialty and department stores. During the recession, Target‟s emphasis on “Expect More” was internally thought to be putting the company at a disadvantage due to consumers shifting priorities. The...