Target's Executive Summary
Introduction
Target Corporation is in the market to deliver a higher quality product and experience to a more upscale consumer than its competitors. This allows Target to have very specific advantages in the competitive environment. The combination of these two things results in unique performance characteristics in financial performance. All of this is combined to make a forecast on the future of Target and a decision to buy Target shares as an investment.
Competitive Environment
Rivalry among Competition: High
As a discount retailer, some close competitors of Target are Wal-Mart and Costco. Due to the three sellers’ broad product mix, they sell similar or identical items, which leads to intense rivalry in this industry.
Threat of Entrants: Low
There is minimal threat of entry in discount retailing due to the high barriers. These include immense capital requirements, access to good locations, economies of scales and hard to imitate brand identity.
Threat of Substitute Products: Medium to High
Target has many close substitute sellers due to its broad product assortment. However, many of these sellers are just a partial substitute for Target’s departments; for instance, groceries – Wal-Mart, pharmacy – Walgreens, apparel and home goods – Kohl’s. Other big-box retailers require a membership fee to shop at, such as Costco. Thus, no complete substitute can be defined for Target.
Bargaining Power of Suppliers: Low
Target has a variety of suppliers and not a single one accounts for a big fraction of its inputs. Target is also a large volume purchaser, which results in low bargaining power of suppliers.
Bargaining Power of Buyers: Low
Since Target has many buyers and each one only makes up a small portion of the overall sales, it is difficult for any individual to influence the performance of Target. However, due to the availability of substitutes, consumers do have the power to shop elsewhere when need be.
Summary of Present Performance
When
Target Corporation is in the market to deliver a higher quality product and experience to a more upscale consumer than its competitors. This allows Target to have very specific advantages in the competitive environment. The combination of these two things results in unique performance characteristics in financial performance. All of this is combined to make a forecast on the future of Target and a decision to buy Target shares as an investment.
Competitive Environment
Rivalry among Competition: High
As a discount retailer, some close competitors of Target are Wal-Mart and Costco. Due to the three sellers’ broad product mix, they sell similar or identical items, which leads to intense rivalry in this industry.
Threat of Entrants: Low
There is minimal threat of entry in discount retailing due to the high barriers. These include immense capital requirements, access to good locations, economies of scales and hard to imitate brand identity.
Threat of Substitute Products: Medium to High
Target has many close substitute sellers due to its broad product assortment. However, many of these sellers are just a partial substitute for Target’s departments; for instance, groceries – Wal-Mart, pharmacy – Walgreens, apparel and home goods – Kohl’s. Other big-box retailers require a membership fee to shop at, such as Costco. Thus, no complete substitute can be defined for Target.
Bargaining Power of Suppliers: Low
Target has a variety of suppliers and not a single one accounts for a big fraction of its inputs. Target is also a large volume purchaser, which results in low bargaining power of suppliers.
Bargaining Power of Buyers: Low
Since Target has many buyers and each one only makes up a small portion of the overall sales, it is difficult for any individual to influence the performance of Target. However, due to the availability of substitutes, consumers do have the power to shop elsewhere when need be.
Summary of Present Performance
When