Target Case

Topics: Wal-Mart, Population, Household income in the United States Pages: 2 (773 words) Published: April 20, 2015
Chase Cox
Jeb Hollenbach
Andrew Croft
Target Case Study Group 10
Executive Summary
The purpose of this case study was for the CFO of Target, Doug Scovanner and 4 other members of the Capital Expediture Committee, to evaluate the top 5 capital expenditure requests of 10 and decide which would best fit Target’s future store growth. Prior to this meeting Target’s management was committed to opening 100 new stores a year to compete with other competitors such as Wal-Mart and Costco.

Target’s strategy is to profile consumers such as "college-educated women with children at home who are more affluent than the typical Wal-Mart customer”. This type of consumer is labeled as Target’s “core guest” for whom Target advertises the slogan of “expect more. Pay less”. Target guarantees a shopping experience that features a store décor and pleasing ambience that provides the core guest with a satisfactory shopping experience.

Discussion
Gopher Place- this store is a $23 Million investment to build a P04 store that has a positive NPV of $16,800,000 and IRR of 12.3%. The area Gopher Place is located in is considered to be an important market. The population growth rate of 27% coupled with a median family income of $56,400 and expected competition from its competitors makes this a vital area for potential growth. Consequently, of the adults living in the surrounding area of Gopher Place only 12% meet Target’s core guest criteria of having four or more years of college education.

Whalen Court- is a $119.3 million investment to build a unique store to help capture the metropolitan area that is populated by 632,000 people where 45% of adults have obtained four or more years of college education. Advantages of this area include Target’s largest NPV of $25,900,000. Unfortunately, Target will have to lease this property instead of purchasing the land on which to build the store.

The Barn- the cheapest of all capital expenditure requests, The Barn was a $13...
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