Photo: Target
Will Target find its identity with a department store layout?
Over the past year-and-a-half, Target has played with its grocery assortment, brought its urban stores under one banner, and refocused its strategy along a “transformation roadmap” that targets four key areas in an attempt to carve out a distinct, new identity. But the chain’s most fundamental change may now be on the way. Target is, in a few locations, testing out multiple alterations to the look and feel of its stores. If the new formats catch on, we may soon see Target locations that look more like department stores than the familiar grocery hybrid of recent years.
Target is running a test in 25 stores in the Los Angeles area, according to the Minneapolis Star Tribune. The test project, titled “LA25,” consists of implementing 35 changes to each store’s look and feel. Some of the individual changes have already been tested in other stores, but the aim of the LA25 tests is to see how all 35 alterations function together within one location. One of the most significant upgrades is themed displays, similar to department stores, placed at the entrance in place of the discount bins and shelves that now greet Target shoppers.
Target will also make use of mannequin busts showcasing products in the activewear department and place service advisers offering customers information in the aisles, according to the Star Tribune reports.
This sign of Target’s ongoing efforts to move upscale and experiential come alongside last month’s news that the chain hired Mark Tritton, former executive at luxury retailer Nordstrom, as its chief merchandising officer.
The impact of the changes Target has rolled out thus far is not clear. The company recently released a Q1 earnings report that an article on CNBC called “mixed,” stating that the while results topped expectations, earnings for the quarter were light.
Other analysts have taken a dimmer view of the chain’s recent performance. Seeking Alpha reported that two straight quarters of revenue loss is “troubling” at a time when “other discounters” are growing. Given the changes it has been making, though, Target may no longer see itself as a discounter.
- Target tests new displays, service reminiscent of a department store – Minneapolis Star Tribune
- Target pursues a single-banner approach – RetailWire
- What will former Nordstrom exec do for Target’s merchandising? – RetailWire
- Target earnings top expectations, but revenue is light – CNBC
- Target Shares Roadmap to Transform Business – Target.com
- What Went Wrong At Target? – Seeking Alpha
Discussion Questions
DISCUSSION QUESTIONS: Will a department store-inspired look elevate the shopping experience and ultimately improve Target’s sales and profits? What do you see as the potential pitfalls?
Poll
BrainTrust
Max Goldberg
President, Max Goldberg & Associates
Lee Peterson
EVP Thought Leadership, Marketing, WD Partners
I’m heartened by this move: “place service advisers offering customers information in the aisles.” Target’s well-documented problems with out-of-stocks, especially around launches of hot designer items, will not be solved quickly. Perhaps with this staff in the aisles they can finally be equipped with tablets or other tech to answer questions on out-of-stocks by taking shoppers’ email addresses with the promise that they will be the first to be alerted on new stock.
Also, while the issue of “showrooming” is also well-documented, I would argue that in categories like electronics more shoppers looking at mobile handsets in front of items are on a journey and just want to see the product before ordering online from Target. But today these shoppers take pictures of price tags or click an email icon to share with themselves, and Target captures none of this intent. Hopefully Target will embed “Remind Me” alert options in their mobile site and apps and store associates can stress that Target will help them on their journey with product updates versus trying to get them to buy during that trip.
In a word, no. Target needs to take care of the basic retail building blocks, such as keeping products in stock. Management seems to be moving in many directions at once, and is only succeeding in confusing consumers about Target’s core story. “We’re a discount store.” “We’re a chic fashion store.” “We’re a grocery store.” What is Target and what does the Target brand mean? Changing its floor plan to look like a department store, a class of retailer that is taking consistent hits from consumers, is not the way to go.
I say give Target a chance without assuming failure as we so tend to do in our culture. Even this article’s questions beg for failure. We’re looking for “pitfalls” instead of benefits and rewards, for example. Even asking “Will this new look improve sales and profits?” implies the answer “No.” Putting “How” as the first word will make all the difference.
Years ago I created a poster titled “11 Commandments for an Enthusiastic Team” and commandment number two is “Look for ways to make new ideas work, not for reasons they won’t.” That principle will work amazingly in retail. Imagine what it would do for our political system!
Give it all you’ve got, Target!
One of Target’s biggest problems has been that they regularly run out of stock. However, they seem to be tackling that problem. Target recently invested a large sum of money in supply chain technology and they are taking other steps such as redesigning their shelving so that they can fit more products, and they are working with suppliers to adjust their case sizes to better fit their stores’ needs. An updated look and feel can’t hurt, but if they don’t fix their supply problems and continue to leave their customers frustrated, it will do little to help their bottom line.
Target’s origins in 1962 were as an outgrowth of the Dayton’s department store chain. (Full disclosure: I worked there from 1978 to 1982.) Dayton’s was a pioneer in trend merchandising and moved many of its key merchants and marketing executives over to Target to help create the “Tar-zhay” that many of us grew up with.
But most of Target’s initiatives for the past several years have been reactive to Walmart (and now Amazon) instead of forging its own path. The expansion of food, the “dollar store” at the entrance and the overall commoditization of the brand have helped Target lose its way. Meanwhile, the chain continues to struggle with the ABCs of good supply chain execution.
So if the LA25 initiatives help reposition Target as a more upscale alternative, they will probably be successful in the long haul — but only if Target does a better job keeping goods in stock!
Changing the way Target merchandises makes sense to me, but I don’t think they should emulate department stores — the dying dinosaurs of retail. Rather, they should look at some of the creative ideas Urban Outfitters has recently come up with (their “Space” models) or even the stickiness of concepts like Eataly and 365. As long as you’re going to go the route of change (which is a necessity, by the way), you might as well provide the customer with some adventure/experience.
Go Target, go … keep plugging, stay ahead of the doomed.
What I find strange with Target is that if you want to buy groceries, it is a 220 foot walk from the checkouts. It’s going to be difficult to grow in groceries if it’s always an afterthought. How many times do we see a Walmart consistently doing over $100 million a year while the Target across the street is about two-thirds the size of Walmart and only doing $35 million? Walmart is 24 hours. Target closes early at 11 p.m. The grocery volume at Target turns so slow they must limit the amount of perishables like fresh meat and produce. The sales per square foot at Target is consistently slower than Walmart. I often wonder if the Target model is sustainable.
Target will never find its identity. These guys are always looking for the one thing that will fix everything and never looking at the basics of how to fix their business. Knock on HQs door and tell them you have the latest “silver bullet” and they will buy it.
Target is a friendly, clean, easy-to-navigate shopping environment. My concern is customer confusion causing smaller basket size and a jump in logistics expense which has many effects. I’d suggest customizing according to the individual tastes and preferences of the market versus the redesigning of the store traffic and display experience uniformly. To remain relevant and worth the trip, meet the shoppers needs versus finding a formula that pushes conformity on the customer.
Let’s face it, the success of Target has always been that you come in for a tube of toothpaste and leave with a cartful of items that you just couldn’t resist. Adding more displays of well merchandised products will probably only add to the impulse buys of their cheap chic products.
It would seem that Target is throwing many things at the wall right now in hopes that one or more of them actually stick. While there is nothing inherently wrong with emulating a department store look in apparel, cosmetics and other appropriate categories, this move hardly seems a solution to their core problems.
Out of stocks, operational efficacy, a cogent category by category variety strategy, and in-store merchandising are the glaring issues that have plagued Target for a number of years. Unlike some of the more superficial changes we currently see Target embracing, each of the issues that I cite are more complex and require significant executional muscle at the store level. Until they are addressed, all the mannequins on 5th Avenue are not going to change Target’s financial results.
So Target is (re)introducing an idea from the ’90s … the 1890s that is. I was in a Target this past weekend to buy a phone. They had a nice display of floor models, the shelf stock was OK — if a bit skimpy — but the labeling matching display to stock was poor and an employee hovering behind me speaking into his walkie-talkie was distracting. I ended up buying there, but largely because the Best Buy across the street did worse on similar criteria.
So where am I going with this? Target — and others — still need to work on fundamentals before “elevating the experience.”
Don’t you just love watching a company fix what isn’t broken in response to the problems they face? The good news for Target and those that have or will mimic the plan in this discussion is that it will, for a short time, draw in the low spending curious consumer that is never truly loyal except to the “what’s new” social media public opinion forums. The bad news is that the more serious issues will still continue to have a negative impact on sales and profits.
Here’s a different question, “Is Target putting itself in the middle of the market?” You know what’s in the middle and it ain’t good.
Seems Target is trying so hard to be bleeding edge (see the bathroom mess) that it is losing sight of the basics of being a discount store. The push for being trendy (wellness) is challenging its core promise to a mass audience. And then they expand the grocery floor set and include booze.
Can it simply describe its value proposition? I have a suggestion — go across town and ask Joly for a hand.
I think Cornell is at risk for throwing the baby out with the bath water. The drums are beginning to beat …
Or as we like to say on a most Fridays, “retail ain’t for sissies!”
With all due respects to my esteemed colleagues, I think we are missing a simple, and fundamental point here. This is an experiment. A multi-factored one at that.
If done properly, the results could yield a great number of changes that may range from the familiar to the radical. Old school visual merchandising to engage and inspire consumers? Duh. It’s a proven, relatively in expensive technique. An IoT approach to home tech products? Tell me how easy it is to get the benefits of a Nest thermostat. Yep.
Target is a large operation capable of doing many things at once.