Introduction : Target is a superstore designed to sell a more stylish product at affordable price. Their stores include all different types of products ranging from clothes to furniture, to electronics and household products. They are an upcoming store with excellent growth potential in a wide competitive market. Target is well positioned to learn from Wal-Marts mistakes as well as some of their other competitors.
I. Strengths - Target is well positioned to experience sustainable growth through its solid customer base, exclusive product lines, positive marketing, and its growing credit card business.
II. Weaknesses Target is a company that could improve in several different areas including their strategic operations, strategies about pricing, advertising to their customers, dealing with their two other divisions, and future investments.
III. Opportunities -
IV. Threats Target is company that have threats from different sources. They have competition from different products and companies, a gap in production, and threats that are involved with who invests in this company.
Sustainable Growth Potential
In 2004, there were 1,172 Target and 136 Super Target giving a combined total of 1,306 stores. Total square footage has increased 8.2% from 2003 and the company has a strong network of 25 warehouses in place supplying their stores. In times past, stock outs occurred at stores hurting sales and steps have been taken over the last few years to build up the infrastructure supplying the stores. Target is growing at a sustainable rate and plans on operating about 2000 stores by the end of the decade. Target should not experience cannibalization like Wal-Mart is experiencing for some time since there are not nearly as many Targets as there are Wal-Marts. Target also target large suburbs and cities that have people that do not want to shop at Wal-Marts for ethical and socio economic reasons. The areas in which Targets are located are because they contain the demographics that they are targeting. Target is being selective and locating in areas with the best growth potential to increase revenue. Target has been focused on consistently bringing down costs by getting rid of redundancies and using direct shipping rather then dealing with third parties to increase profitability. Sales and revenue have been consistently strong increasing year after year. Sales in 2004 were strong with sales reaching almost $46.9 billion, up 11.6% from 2003 revenue of about $42 billion. In 2004, the decision was made to sell Mervyn's and Marshall Field's, which has had lagging sales, for $4.9 billion in pre-tax profit that way the company can focus on Target operations. The board has also authorized buying back $3 billion in stock over the next 2 to 3 years, which shows good governance and it should cause the stock price to increase. Target's ever increasing size allows it to enjoy economies of scale and benefit from cost reductions due to its size. Its strong brands differentiate it from its competitors such as Wal-Mart and others. Its strong brands will help foster brand loyalty and future sales. Solid Customer Base
Target has differentiated itself from Wal-Mart and others by creating a strong brand image which appeals to the middle class, college students, and others aspiring to be perceived as middle to upper class when they can not afford to be. This has allowed them to create a strong customer base. People do not feel ashamed to shop in a target. Most people do not feel proud about saying they bought something at Wal-Mart, especially clothing. No one wants to say they buy there clothes at Wal-Mart because they are not stylish and you become perceived as poor. Wal-Mart all but comes out and tells you that you are poor, where as Target provides style at a bargain. Target has created designer lines and carries better clothing at affordable prices. Target also does not have...