Does Target Have an Image Problem?
By George Anderson
Could Tar-jay be a liability in Target’s plans for continued growth?
A recent report in the Star Tribune of Minneapolis questioned whether the discount chain with the hip advertising and store merchandising has positioned itself for a rough time in a post-Katrina U.S. market where prices on everything appear likely to increase.
“It doesn’t matter how high your income. When gas hits $4 a gallon, you’re going to start paying attention to prices,” said Richard Guha, a principal at the New England Consulting Group. “Now is the time for Target to change its advertising to the world at large … and to reassure people that, yes, you can find low prices here.”
A survey conducted by BigResearch in July found that women who only buy clothing if the price has been discounted rank Target as number five on their list of retailers to shop.
The perception that Target’s prices are higher than rivals is just that, according to the Star Tribune.
The newspaper recently conducted a market basket comparison of 14 identical items, such as liquid detergent, DVDs, jeans and diapers, purchased at Wal-Mart, Target and Kmart.
When the items were tallied, Target was 87 cents cheaper than Wal-Mart and $17.08 less expensive than Kmart.
Jeffrey Klinefelter, a retail analyst at Piper Jaffray & Co., said the newspaper’s findings (while obviously based on a limited number of goods) was representative of his firm’s findings. According to the Piper Jaffray analyst, Target’s pricing is competitive with Wal-Mart and often times lower than its larger rival.
“It’s not widely known, but Target shops every one of its competitors within a five-mile radius of its stores each week,” said Mr. Klinefelter. “They have a deliberate strategy to be competitive, particularly on commodity items.”
Moderator’s Comment: Does Target have an image problem when it comes to the perception that many consumers have about its pricing practices? Should Target
change its advertising message to emphasis price more, considering the current economic environment?
Paula Thornton-Greear, a spokesperson at Target, described the chain’s philosophy on value.
“At Target, value is about more than low prices — it’s about trend-driven merchandise with the everyday basics, a unique shopping experience, and a commitment
to the community,” she said. –
George Anderson – Moderator