Report: Target’s on Target (Mostly)

Sep 26, 2002
George Anderson

By George Anderson

A Moving Target is a 41-page report published by Retail Forward that examines moves Target is likely to make over the next five years.

Sandy Skrovan, vice president, Retail Forward and author of the report says, “Target has hit the bull’s eye with its differentiated offer, winning brand strategy and merchandising strengths. The company has developed a compelling strategy and business model that allows it to co-exist in the crosshairs of archrival Wal-Mart. Clear opportunities exist for Target to grow same store sales, drive more shopper visits, increase average ticket, and make its existing space more productive.”

Retail Forward sees a number of growth opportunities for Target.

  • New Store Expansion. The report maintains that the chain can more than double current store count without difficulty.

  • Global Expansion. Moving north to Canada appears to be the next logical logistical move for the Minneapolis-based chain.

  • Extend Unique Positioning Strategy and Strengths. “We expect Target to continue down the path of identifying other categories and markets where its unique brand management skills and brand cachet will give them license to grow, expand, and improve productivity,” Ms. Skrovan states.

  • Drive Traffic and Shopping Frequency. SuperTarget is the key to this grocery-based strategy.

  • Hone Differential Advantages to Build Customer Loyalty. Target will increasingly focus on multi-channel initiatives, guest relationship management and smart card technology to bring it closer to its shoppers.

While the future of Target appears bright, Retail Forward also sees a number of challenges ahead. A few of these included in the report is the need for:

  • Increasing store productivity. Same store sales and sales per square foot remains behind Wal-Mart.

  • Building shopper frequency. Retail Forward’s Shopper Survey shows that among households who shopped at Target, only 12% visit on a weekly basis. More than one in three Wal-Mart shoppers are weekly visitors.

  • Keeping consumers from going elsewhere. Target shoppers are going to Wal-Mart for lower prices on food, HBC and other items carried by both stores.

  • Translating “fashion” to food. Target needs to create a point of differentiation not evaluated on price alone.

Moderator’s Comment: What is your assessment of the
challenges and opportunities facing Target?

Many consumers love shopping at Target. Many of these
same consumers do not love shopping at Wal-Mart, but they do anyway. A recent
informal price check we did found little difference between the prices of approximately
25 of the same items found in both stores. Target’s appeal may be more upscale,
but it still remains a discount store. Consumers need to be reminded of that
from time-to-time. [George
Anderson – Moderator

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