Client Contests

Tuesday, June 21, 2011

Target to Tar-zhay, the Rise and Steady

Target made a burst on the scene as being a low cost classy store.  As it became more chic and added more designers to spruce up their apparel and home goods departments, they quickly transitioned to being called Tar-zhay by its favorite customers!  This name made it sound more upscale and high end.  It was no longer your store you run to in efforts to save money, but it was the place to go to design your life on a budget. 

In this failing economy Target has made some moves to try to increase their sales and boost their revenues.  These changes are causing the decline in the look and feel of the store pushing it back to being known by the original name Target instead of the fashionable Tar-zhay.  Food is a necessity and grocery stores can always expect customers.  Well Target thought that by adding food they would bring in more shoppers who would not only buy food, but also buy everything else they have to offer.  By bringing in food, they changed their demographic of shoppers.  Shoppers are coming in, but they’re getting food and food only.  Target is losing its edge to be a competitor with department stores and off-mall retailers.  It’s now just becoming your regular discount chain competing with Wal-Mart.  The second marketing decision they made was to give 5% back when shoppers use their Target credit or debit card when shopping at Target.  It takes a while for 5% to add up and make that big of a difference.  If you’re not shopping for food, you are better off going to Kohls or Bed Bath and Beyond who offer 20% off coupons and have just as stylish clothing and home items as Target.

Target believes that their lack of financial gains are purely based upon the economy and consumer’s lack of comfort in using discretionary funds to purchase products such as clothes and home decorating items.  Their thought is that by expanding their food offerings and creating lower prices they will maintain their current customers and gain more, so that when the economy does turn around they will have the opportunity to reap the benefits of the large fan base.  Sounds like a good idea, they just need to hope they don’t lose the upper level of spenders because they became too general and lost its Tar-zhay appeal!  They have also decided to increase and update stores in Canada to continue to enhance their brand awareness and increase sales.  Amazon.com had been managing Target’s website for many years now, but Target has made the decision to now manage their own website.  I’m not sure if this is a financial decision or a business strategy, but they are losing some experience and the repercussions of this could be deadly. 

Target came on the scene and was a statement maker.  When people went to Target they knew they would come out with more than they expected and more importantly with a smile on their face.  Target gave you the sense of accomplishment in picking up the one or two necessities and the satisfaction of finding that hot item at a super low price.  As the economy has changed so does the variance in spending.  While I think incorporating food into the product mix is a good idea, not much about food says chic.  In many stores, food items have overtaken store space and pushed the trendy items to tight corners declining the opportunity to be seen and purchased.  I believe there has got to be a way to maintain the trendy products, while welcoming the necessary products.  Target should consider cutting back an aisle or two in their food section and make more room for clothing and home furnishing products to be more spread out.  Organize the store in a way that these fabulous products jump out at you and aren’t just great finds tucked away.  By doing these things I believe they can easily hold on to the Tar-zhay style and more importantly see a profit increase.  While I realize at some point organizations should handle their own websites, when you’re partnered with such a great company as Amazon, I would take caution in ending that relationship.  I hope that they have a long transition so that they are equipped to make sure the customer never notices the change.  B.M.M.O. Consulting wishes Target all the best in increasing their market share and revenue.  We will be watching, and is very hopeful that Target will get its Tar-zhay chic back very soon!


2 comments:

  1. I like Target and I love Super Target! When I can get chic at a reasonable price and grab some food items I need in 1 stop, I'm always happy. Going to Target is like an experience, whereas Wal-Mart is like an errand stop at the store for my specific list of things, in and out--if I go there. I'm sure an economic upswing will help Target, but I know they are pretty comfortable at their #2 spot, largely because of the issues Wal-Mart faces. You have a different mindset when going to 1 v. the other. In so many words, "Go Target!". They rotate their specialty lines well, and keep consumers anxious about new ones. It's a can't miss-- food and all.

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  2. Target's chic appeal definitely decreased after adding food to the store. It made the store setup less efficiently organized similar to Wal-Mart’s setup. However, adding food was a necessary action to meet American's ever increasing need for the one-stop shop. Before Target added food, some people would go to Wal-Mart to get food and then to Target for nicer items. Some people wouldn't go to Target and purchased everything from Wal-Mart. Now people can get everything from Target and not have to choose. Target should consider making it's look similar to a more higher end grocery store like a market to increase the chic appeal. I also like the idea mentioned in the blog of changing the layout to highlight the clothing more.

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