PL Buyer Cover Story: On Target?
By Jill Rivkin
Through special arrangement, we offer this excerpt from PLBuyer’s recent cover article for discussion on RetailWire. Click to view the entire article,
Though it’s already so recognizable that it’s headlining a line of couture items in a chic Los Angeles boutique, the big red bull’s eye still isn’t quite enough brand recognition for Target. The nation’s No. 2 discount chain is splashing famous designers – alongside the bull’s eye – on television and in print ads to build its cheap-chic image and set it apart from its well-known Bentonville, Ark., competitor.
Simultaneously, Target is tackling the grocery business by expanding food sections in many of its stores and further developing a store brand program featuring everything from basic commodity items to high-end chocolates. Additional grocery space, freezers and coolers are being squeezed into standard Target stores, while SuperTarget outlets are now home to expanded produce, bakery and deli sections featuring a host of exclusive items. Taking a cue from some of the nation’s leading grocery chains, Target introduced its own line of high-end meats under the Sutton & Dodge brand name and continues to grow its upscale Archer Farms line to include unique, differentiating items running the gamut from Elder-Flower Pear Bottled Spring Water to Italian sodas, and one of the broadest assortment of store brand spices out there. Target’s national-brand-equivalent items under the Market Pantry brand are given visible homes in displays and endcaps, and the retailer’s distinctive Choxie chocolates boast retro colors and eye-catching packaging, as well as national television spots.
But the question remains: How can a Target differentiate itself, create a strong brand image, compete on price and be everything to all of its consumers at once? Some say Target doesn’t know the answer quite yet, some say it’s on its way and others banter about whether or not Target knows the right strategy at all.
“One of the things they’re doing well is creating an image – it’s a differentiation strategy,” said Dan Raftery, president of Raftery Resource Network. “They are positioning to have higher quality, better design and pushing the connection between design and quality, which can be a little bit squishy because they have to continue to deliver the goods as far as quality, otherwise it won’t work.”
Target’s approach to home goods and apparel takes what other mass merchandisers have done with celebrity endorsements and raised it to a higher level. By teaming up with apparel and home goods designers, Target has created a lineup of exclusive brands that goes beyond private label to a true store brand philosophy.
Don Delzell, a partner at Retail Advantage, said Target has succeeded in exclusive brands, but still has room for improvement.
“I’d like to see Target build fewer brands and carry them across more departments…Borrowing equity – licensing a name – across an assortment of such names creates challenges in presenting a unified overall brand image. Department stores ran into this, and still do… What does Target mean? If there are too many brands, the overall corporate brand positioning becomes diluted and hard to understand.”
On the food side of the business, the Archer Farms premium line features a wide variety of gourmet groceries, appetizers and European-style baked goods. Breads, juices, kettle chips, imported olive oil, hand-harvested coffee, unique snacks and frozen appetizers encompass this brand, well-merchandised throughout the stores’ center store shelves and freezers.
“Target’s big focus is on design, and so they’re positioning their private label to be upscale vs. their main competition, Wal-Mart,” said Mr. Raftery. “They’re trying to distance themselves, but it’s pretty complicated because private label is not just one brand in a store anymore. The strategies differ by category or department – apparel has to have a different cache than private label food.”
Over the past year, Target focused on significantly increasing the amount of space allocated to grocery, with hopes of drawing in more customers and exposing them to other departments in its stores.
“I think it’s a standard ‘we have the footsteps, let’s sell them something else’ retail ploy,” said Mr. Delzell. “How does carrying commodity food categories conform to the differentiated image in the marketplace? Can Target really differentiate in food from others? It’s an attempt to capture more visits. On the other hand, having food doesn’t hurt Target. It keeps it squarely in the same business as Wal-Mart.”
Discussion Questions: Can Target differentiate itself, create a strong brand image, compete on price and be everything to all of its consumers at once?
If no, what can it do?