Winter 2013 - Chain Store Age

WINTER 2013
Differentiating
with digital
T
Performing and transforming
the ‘Target way’
T
op executives from Target have laid out
a vision for future growth that involves a
heavy dose of the things that have worked
well in the past, coupled with a wide range of
new approaches and a heightened sense of
urgency stemming from the company’s recent
decision to back off of previously communicated financial goals.
Business performance in Canada hasn’t been
what Target had hoped and the anemic recovery
of the U.S economy means Target will fall short
of its 2017 sales goal of $100 billion. Despite
tempering its view of future performance, perhaps to levels that will allow it to surpass rather
than meet expectations, Target remains one of
the more compelling growth stories in the retail
industry. And as the company embraces a wide
range of new approaches to perform and transform its business, among the most noteworthy
for the retailer’s supplier community are:
The emphasis on omnichannel: The retail
industry is in the midst of unprecedented
change, with shoppers eager to embrace those
companies who offer an integrated experience.
Target is looking to make up for lost ground and
narrow the gap with industry leaders, but to do
so in a uniquely Target way that is consistent
with the brand. “We’re embracing digital technology to create amazing experiences online, in
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mobile and in stores. And we’re testing, learning,
iterating and partnering to increase speed to
market and give guests more of what they want,
faster,” Casey Carl, Target’s president of multichannel and SVP enterprise strategy said during
a meeting with financial analysts in late October.
An unwavering commitment to “expect
more, pay less”: As Target EVP merchandising
Kathee Tesija noted, delivering on the “expect
more” component of the value proposition is
a never-ending challenge. “The bar only rises
higher and higher, so we must be relentless
in devising new ways to exceed our guests’
changing expectations for convenience, quality
and value.” As for “pay less,” look for Target
to pursue rigorous discipline and innovation in
sourcing operations and supply chain along with
a hyper-competitive approach that optimizes
prices to drive profitable market share growth,
according to Tesija.
A different way to differentiate: It’s hardly
a stretch to conclude that Target will emphasize
differentiation in the coming year, but what will
be different going forward is the way Target
showcases how it is different. The national
image campaigns that helped Target build its
brand since the inception of “expect more, pay
less” don’t have the reach or effectiveness they
Continued on page 10
arget created A
Bullseye View a
little more than
two years ago as
an innovative digital
platform to achieve
a deeper level of
Eric Hausman
engagement with
senior group manager
of public relations
those who have an
for Target
interest in all things
Target. Billed as a behind-the-scenes magazine, A Bullseye View was recently relaunched
to incorporate new features and functionality to
build upon its original mission. The corporate
and social public relations team responsible
for the initiative is led by Eric Hausman, who
spoke recently with Target Supplier News about
what’s different, why content rules and the role
of brands in the publishing space.
TSN: TARGET IS KNOWN FOR DOING THINGS
DIFFERENTLY, AND A BULLSEYE VIEW IS
CERTAINLY A UNIQUE COMMUNICATIONS
PLATFORM WITHIN THE RETAIL INDUSTRY.
HOW DID THE IDEA COME ABOUT?
Eric Hausman: We wanted to find a way to
better connect with media, bloggers, brand
advocates and others to tell a more complete
and richer Target story. And we knew we
needed to go beyond traditional earned media.
We created A Bullseye View to complement
our other owned media channels, like Twitter
and Facebook.
TSN: TALK ABOUT SOME OF THE CHALLENGES THAT HAD TO BE OVERCOME ONCE THE
VISION WAS IN PLACE TO EXECUTE AN ENTIRELY NEW COMMUNICATIONS PLATFORM
IN THE RAPIDLY CHANGING DIGITAL SPACE.
EH: There are always challenges to disruption.
Two years ago, the idea of brands publishing
their own content was still pretty new, so one
of the biggest challenges was to convince our
Continued on page 9
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Lowered expectations provide
opportunity to outperform
I
t was a bitter pill to swallow when Target’s
top executives met with financial analysts in
late October for the company’s first investor
meeting in Canada. Forced to acknowledge that
entry into Canada with 124 stores had yielded
sales well below estimates, the company went
a step further and reduced its expectations for
U.S. store growth and same-store sales.
The company’s difficulties in Canada —
mainly related to keeping shelves full — were
well documented, so the greater revelation
from the meeting involved a meaningful reduction in the outlook for the U.S. business. Recall
a little more than two years ago when Target
announced a grand plan to achieve annual
sales of $100 billion and earnings per share of
$8 by 2017. Many assumptions underpinned
those estimates, including a forecast that entry
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into Canada would generate sales of $6 billion
and an 80 cent contribution to earnings per
share. That left the estimates for U.S. sales
to total $94 billion by 2017, thanks to the
combination of store growth and same-store
sales growth. Now Target is backing off of
projections in both areas as it foresees slower
store expansion and same-store sales growing
slower than its original forecast of 3%. As a
result, the new forecast calls for sales in the
mid-$80 billion range by 2017.
That’s hardly good news for suppliers relying on Target as an outlet for their products,
but it is a different story for shareholders.
“Despite our current challenges, including
a tough U.S. environment and a soft start in
Canada, we continue to believe in our ability to
achieve our EPS and dividend goals for 2017,”
Target CFO John Mulligan said.
How can that be? For starters, with Target
spending less on stores, it has more capital
available to repurchase and retire shares. As
a result, share repurchase activity is occurring at a 4% rate, above the 3% to 4% pace
envisioned in the original plan, and dividends
are growing faster than the 18% pace originally planned. With fewer shares outstanding,
dividend payments can increase faster, and
earnings per share calculations benefit too as
profits are spread over a shrinking share base.
Next year, Target expects to spend roughly $4
billion to buy back shares, which puts it on track
to retire shares at a 5% pace, depending on the
stock price. By 2017, Target expects to be paying
a dividend of $3 a share, and the earnings per
share target of $8 remains intact. l
Target pops up in
Manhattan
T
arget knows how to make a splash when
it comes to launching new products. The
retailer did just that earlier in November
in a figurative way when it placed a seductive model on an elevated platform in New
York’s Grand Central Terminal.
The occasion was the introduction of a
new bath and body product line from Sonia
Kashuk. Her products were merchandised
along the four sides of an 8-and-a-half-ft.tall platform that served as the centerpiece
of an unconventional pop-up store. As large
translucent balloons floated around the
model in the bath tub with a discreet Target
logo on the side, it created quite a spectacle
for the tens of thousands of commuters
passing through the busy transit hub on a
Monday morning.
Some stopped to snap a quick photo with
their smartphones and were encouraged to
post the images on Instagram using using hashtags #SKBody and #TargetBeauty.
Kashuk herself was on hand to make the
Monday morning kickoff more special and
even answered questions about the offering
of merchandise that included fragrances,
shower gel, body lotion, body butter, loofas
and shower caps. And while some who
stopped by even made purchases from the
several Target associates at checkout stations located on opposite sides of the display,
this pop-up store was more about showcasing Target’s affiliation with Kashuk and
solidifying perceptions of Target as a unique
retail brand.
Kashuk has been helping Target achieve
that objective for nearly 15 years. The makeup artist first teamed up with Target in the
late ’90s, and over time, she has applied her
brand to an extended range of products. Target carries Kashuk’s line of makeup and accessories, which just got a makeover and is
available in black packaging to complement
the new collection, which also is packaged
in black with hand-illustrated floral patterns.
Anchored by four fragrances created in
collaboration between Kashuk and perfumer
Jérôme Epinette of Robertet, the collection
is classic Target — offering consumers a
touch of luxury at an affordable price point.
A model poses in a bathtub as part of Target’s Sonia Kashuk pop-up store in New York’s
Grand Central Terminal.
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The fragrances are Pink Innocencia, Purple
Seductia, Yellow Alluriana and Red Promisia.
The Sonia Kashuk bath and body collection
already is available at Target.com and made
its debut in stores Nov. 10.
As for the kickoff in Grand Central, such
treatment isn’t appropriate for every product,
but there are several takeaways for suppliers. For starters, the Kashuk launch serves
as the latest reminder that Target has a
very open mind when it comes to marketing
and merchandising initiatives, considering
the retailer’s future success depends on its
ability to constantly remind shoppers that it
is unique.
The same thinking went into an even more
over-the-top launch earlier this year when
Target created an oversized doll house inside
Grand Central in conjunction with the launch of
its Threshold brand of home goods. As Target
Supplier News noted at the time, nothing is
off the table when it comes to brand-building
ideas. The company has a relentless need for
creative ideas and new ways to reinforce the
perception of its positioning as a provider of a
superior store experience and upscale products
at discount store prices embodied in the “expect more, pay less” value proposition. l
Sonia Kashuk, makeup artist and founder
of her own cosmetics line, attended the
pop-up store event to answer questions
about the new merchandise.
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Elevating service levels in
beauty and baby
N
ew store experience initiatives in the
beauty and baby care departments
at Target are elevating service levels
and creating new sales possibilities for the
company’s suppliers.
The beauty and baby departments are
high-margin trip generators that resonate
strongly with Target shoppers and serve as
key areas where the retailer seeks to fulfill its
“expect more, pay less” value proposition of
a differentiated store experience and superior
product assortment.
“We’re enhancing the level of service in
our stores by training our teams to go beyond
answering basic navigation questions to offering solutions,” Target chairman, president and
CEO Gregg Steinhafel told financial analysts
during a recent meeting. “We’re enabling this
change by making investments in technology
to equip the team to solve problems quickly.
This is a major cultural change in our stores,
moving beyond an operational model to a
service and sales orientation.”
The new philosophy has manifested itself in
several ways, most recently with the introduction of a test program in the baby department
of 10 Chicago-area stores. To create a more
compelling shopping experience, the layout
was redesigned with lowered fixtures, and
interactive digital content was added that
features expert advice from parent resource
provider BabyCenter. However, the most noteworthy change is related to the addition of Baby
Advisers equipped with iPads. The advisers are
able to offer an extended aisle experience by
integrating with Target’s online product offering and providing personalized and unbiased
information.
It is rare to see any mass market retailer
adding store labor these days, but Target must
feel the investment will pay off in increased
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The baby department is a key area for the retailer to add value to customers’ shopping
experience, as the category is a high-margin trip generator.
sales of high-margin products in categories
that are key to its core customers. The advisers
staff the department at peak times, such as
11 a.m. to 7 p.m. Saturday, 1 p.m. to 8 p.m.
Monday through Friday and 11 a.m. to 7 p.m.
on Sunday.
“We’ve heard from moms that they love
shopping for baby, but are hungry for information on what’s best and want help in making
the smartest choices,” said Mary-Farrell Tarbox,
Target’s group VP stores for the Chicago region,
when the test was launched. “This offering will
help guests feel more confident about their
purchases and ability to easily navigate Target’s
baby offerings, both in store and online.”
Don’t be surprised to see the baby initiative
expanded soon, as Target has indicated a favorable customer response based on category
comps and increases in registry creation.
The baby initiative follows a similar serviceoriented initiative that was first introduced in
Chicago area stores in July 2012. That’s when
Target launched its Beauty Concierge program
in 28 Chicago stores by staffing the beauty
department with brand-agnostic beauty enthusiasts. The goal was to provide shoppers with
personalized, detailed and unbiased information
about beauty and personal care products. The
program has steadily expanded since then and
is now available in 300 stores in such markets
as Los Angeles; Washington, D.C.; Northern
Virginia and Baltimore. With the addition of
Beauty Concierges to stores in New York, New
Jersey, San Francisco and Dallas/Fort Worth,
the program is available in 300 stores, with 100
more expected to be added in spring 2014.
“In an often crowded and sometimes daunting marketplace, Target’s Beauty Concierge
program ensures that guests receive the
friendly, personalized counsel they need to
purchase their favorite beauty products at affordable prices,” Bryan Everett, SVP stores, said
at the time the program was expanded in the
Midwest region stores he oversees. l
www.SetSight.com
[email protected]
(800) 490.0424
Case Study
Using SetSight to influence Target orders
Background/problem
This case study involves an Asian company that has been a merchandise supplier to Target for
over 10 years and has won numerous vendor-of-the-year awards. They had been monitoring
their supply chain doing their own analyses of POL and IR data supplied by Target, a process that
required them to draw from multiple data streams and manually bring the data together in one
place.
They have been frustrated, however, in that despite the significant time required to produce these
analyses, their attempts to improve orders and supply chain efficiencies had fallen on deaf ears at
Target.
Solution
They needed a data analysis and reporting system that (a) would significantly shorten the time consuming process of manually consolidating data from multiple sourses, and (b) produce the kind of projections and reports that Target would pay attention to. For this they signed onto the SetSight platform,
an industry leader in retail data analytics with an extensive history of working with Target’s data and
suppliers.
Implementation
Month 1: Multiple streams of historical and current data as well as sales forecasts from Target were downloaded into SetSight SetSight’s standard reports immediately highlighted low
instocks and future issues with inadequate inventory for a product being featured in an upcoming circular ad. Using SetSight’s Inventory Flow Grid, a report format favored by Target,
the company was able to show Target that their projected inventory levels were insufficient to
support this ad. As a result, Target placed additional orders for over $150,000 of that product.
Month 2: Using SetSight’s analysis of historical data, they were able to show Target that even
based on normal (non-promotional) buying patterns, instocks for many of their items would
fall below desired benchmarks. This resulted in a second new order for over $125,000 of merchandise.
Results: An additional $285,000 in orders from this company’s first two months of using SetSight.
Get in touch for a free demo! (800) 490-0424 or [email protected]
Regaining shoppers’ love affair
with
T
loyalty programs
he love affair between retailers and
loyalty programs is in serious distress.
Several major retailers have cut or
reduced their loyalty programs, and more
are considering a trial separation. Customers seem to be shrugging off the change
for now. As long as they’re getting the
discounts, it’s easier for them to not have
to carry and swipe their cards, or give their
phone numbers at checkout.
So, how did we go from the road to “happily
ever after” and end up at “apathy, at best”?
Like any healthy marriage, loyalty programs are all about the relationship. Birthed
to foster deeper relationship with customers,
loyalty programs have faded in some circles
as data is crunched, munched and — in too
many cases — overanalyzed the wrong way.
According to a 2012 SAS Loyalty 360 study,
“only 24% of [retailers] believe their efforts
are very effective in delivering desired
results,” proving that these programs have
been “neutral in their impact,” or even worse
— completely ineffective.
From my conversations with retailers
about their loyalty programs, it seems this
data has been swirled and debated so many
times; it’s like a good book that is now
being read upside-down. The story is going
nowhere, and eyes of experienced marketers
are getting tired of trying to make it out.
And for customers, loyalty programs have
lost some luster. Customers know they are
being watched — the long list of coupons
attached to the checkout receipt attests to
that. Yet, do they actually feel more loyal
because of the rewards they’ve received
— or perceived — to date? Discounts are
expected, and customers will swipe their
loyalty program cards to get them, but it
doesn’t mean they’ll drive past a competitor,
who also has a loyalty program, to shop at
your store.
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Still, loyalty programs have their believers, and they have stories of success. Programs that reach a higher level of personal
relevance and build a relationship beyond
discounts have achieved a genuine sense
of loyalty and even transparency. Proper
analysis of the data is at the core of loyalty
program success. Here are some steps that
can help you get your loyalty program back
on track.
Dr. Matthew Green
managing director for
emnos U.S.
Commit to changing the way you’re
reading the data
Loyalty programs are delivering loads of
data. Sometimes the current big data obsession
can pile up information and obstruct the view of
why you started the program in the first place.
Now is a good time for a reset. Clear your vision
path, and focus on what you really want for
your loyalty program. Are you focusing on the
most important data to achieve that objective?
Is your organization distracted by other data
points that have emerged? Remind everyone of
what really counts.
Refocus and retrain
Since you launched your loyalty program,
you’ve likely made a lot of new discoveries
and gained new insights from a massive
amount of new data. Has the training for
your team evolved with your loyalty program? Analyzing and acting on data and
insights requires a constant evaluation of
team training and skills to maximize return
— especially when the investment is as
large as a loyalty program. Your data view
reset requires a retraining, too.
Interpret properly
Interpreting data from the wrong angles is
a lot like using Google Translate to prepare
a proposal written in English for your colleagues in Japan. It just won’t make sense.
Yet, we see it happen often, particularly with
loyalty programs. There are a lot of ways,
and debates, to interpret data, but those
options narrow considerably when a clear
objective is in focus. Again, it’s about what
really counts. Here’s where your renewed
focus and training will really matter. This is
where you can pivot toward stronger return
if your team is trained to do so.
Shape the customer experience
Some of the most successful loyalty programs feel like a dialogue from the customer
perspective. Your customers already know
you’re monitoring what they buy, so how
about taking that interaction deeper?
According to a recent PricewaterhouseCoopers
study, which measured the experiences of about
6,000 U.S. consumers across 11 industries,
consumer loyalty is “strengthened by shopping
experiences that forge powerful psychological connections, and not by points or rewards
programs alone.” Therefore, customers must
feel that you care to personalize versus sell
experience. If a retailer is going to collect
information, they should at least do
Continued on page 9
Differentiating continued from page 1
own internal teams to jump on board with a
new way of communicating with our audiences.
We were fortunate to get early buy-in from our
senior leaders, which made launching the new
site much easier.
TSN: TALK ABOUT SOME OF THE KEY LEARNINGS IN THE TWO YEARS SINCE THE LAUNCH OF
A BULLSEYE VIEW.
EH: The most important learning is to remember
your objective and always publish with a specific
result in mind. For example, why would anyone
want to read this, who would want to share it,
etc. It’s also important to focus on quality over
quantity. And be consistent, while also being
open to trying new ideas.
INTEGRATE THE TWO MORE CLOSELY?
EH: A Bullseye View is less about generating
sales in the short term, but rather is a long-term
effort to build brand love and guest engagement through authentic content. One area of
opportunity for us is to better connect our digital
properties without losing what makes each one
unique and successful.
TSN: WHAT HAS SURPRISED YOU MOST DURING
THAT TIME? WHAT HAVE YOU NOTICED REGARDING VISITORS’ CONTENT PREFERENCES?
EH: Perhaps the most surprising is seeing which
content performs the best, and which content
doesn’t do as well as we thought it would.
Sometimes, it can be really hard to predict, and
there are many factors that can contribute to a
story’s success. One constant has been that our
audience continues to be interested in content
directly tied to the Target brand. For example,
our 50th anniversary story about Target firsts,
published in May 2012, continues to be one of
our top-viewed stories each month.
TSN: TURNING TO THE RECENT RELAUNCH, TALK
ABOUT THE KEY CHANGES THAT WERE MADE
AND THE INSIGHTS THAT PROMPTED THEM.
EH: Our regular readers will see right away the
many changes and updates to A Bullseye View.
For example, we introduced responsive design
because we know more and more people are
reading content on the go. We designed the
site for mobile first, and responsive design
means the site seamlessly expands and
shrinks to neatly fit any of the hundreds of
screen sizes and devices people use today
when consuming content. We also made the
home page more visual. The new home page
features a greater emphasis on compelling
imagery and design, as well as even more
stories for visitors to discover. We added
commenting functionality, which gives our
audiences the ability to further engage with
our content. Another key upgrade involved
photo and video hubs. For an easy way to see
our favorite photos and videos, we’ve captured
the best ones in one easy location.
TSN: A BULLSEYE VIEW IS CLEARLY MORE
ABOUT CONTENT THAN COMMERCE. WHY NOT
TSN: WHAT IS THE THOUGHT PROCESS BEHIND
THE TYPE OF CONTENT THAT IS SUITABLE FOR
Loyalty programs continued from page 8
the difference
Let’s face it — like a couple that’s been
together for several years, retailers can get stuck
in their ways with loyalty programs and data.
Making the most meaningful change can mean
tapping an outside data counselor who can bring
an expert perspective.
Although the decision to axe a loyalty program
may be beneficial in the short term by eliminating
costs for operating card database efforts, retailers
should revamp their approach and evaluate the
long-term effects on their brands down the line.
Data from these programs is vital for driving
key business decisions and profitability for the
retailer. SAS Loyalty 360 notes that the cost of
acquiring a new customer is “estimated at five to
something meaningful with it. Direct mailers
and store layout shouldn’t reflect products that
retailers want customers to buy, but products
that customers want to buy. Are you carrying
the brands they love among the products they
buy regularly? Are you considering other ways
to engage them, such as social media platforms? Is anyone bringing the loyalty program
to life inside of the store during the shopping
experience? These are all engagement points
you can develop with a new approach to data
— and these new interactions may serve as
new data feeders as well.
Sometimes an outside perspective makes
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INCLUSION? FOR EXAMPLE, WITH REGARD TO
UPCOMING DESIGNER COLLABORATIONS, SOMETIMES THOSE ARE ANNOUNCED VIA A PRESS
RELEASE OR DURING MEETINGS WITH INVESTORS, BUT OTHER TIMES TARGET HAS USED A
BULLSEYE VIEW TO BREAK NEWS.
EH: Announcing news is always a cross-team
effort, and A Bullseye View is one of the many
levers we can choose to pull. We’re choosing to
break more and more news with A Bullseye View
as opposed to a press release because in many
cases, it is more effective. In other cases, we’ll
make an announcement with a media outlet,
then issue a press release and complement that
with a story on A Bullseye View, with different
assets being leveraged for each.
TSN: IS THERE A ROLE FOR BRANDS TO PLAY ON
A BULLSEYE VIEW? WHAT ADVICE WOULD YOU
GIVE TO BRANDS THAT WANT TO HELP TARGET
ON THE CONTENT FRONT?
EH: Definitely. The key is compelling content.
We’re not looking to be overly promotional. We’ve
had great success including interviews and
videos with partners who tell a story behind a
product or initiative.
TSN: SOCIAL MEDIA IS SUCH A FAST-MOVING
SPACE, AND TARGET STRIVES TO BE ON THE
LEADING EDGE OF NEW DEVELOPMENTS. HOW
DO YOU SEE A BULLSEYE VIEW EVOLVING WITH
NEW CAPABILITIES OR ENHANCED CONTENT?
EH: At Target, we’re never satisfied with the
status quo, so we’ll continue to look at new ways
to enhance A Bullseye View. Stay tuned. l
10 times what it costs to maintain a current one,”
proving that “the nurturing of loyal customers
is not only becoming a high priority,” but also a
strategic imperative. Data has to be used in a way
that is going to matter most for consumers. For
retailers that realize the opportunity, the marriage
and ROI is significant.
It’s going to be a very interesting year! l
Dr. Matthew Green is the managing director
for emnos U.S., where he spearheads expansion
of the company’s retail partnerships, support
services and financial growth within the region.
Based in the firm’s Chicago office, he has more
than 15 years of expertise in client leadership
consultancy and analytical data insights.
Performing continued from page 1
once did, which has Target rethinking how it connects with the digital guest. “Today’s consumer
expects meaningful connections, especially in
digital and social channels, where they spend
a disproportionate amount of time,” said chief
marketing officer Jeff Jones. “The phrase seems
trite, but it truly is about reaching them whenever,
wherever and however they want. Achieving this
— in terms of strategy, organization, capabilities and even our creative approach — requires
new thinking and much more than just traditional advertising.” Accordingly, look for Target to
maintain the foundation of its marketing program
while layering on all manner of digital initiatives
stemming from partnerships with Facebook, Twitter and Pinterest that enlist the voices of Target’s
most passionate guests to help drive sales.
A willingness to fail faster: The relentless
testing and methodical rollout of key merchandising initiatives that were hallmarks of Target’s
approach to managing its business are giving
way to the necessities of speed. According to
chairman president and CEO Gregg Steinhafel,
Target going forward will be willing to sacrifice
some of the precision for which it is known so
it can pursue new initiatives quicker. “We have
got to move very, very quickly. We have got to
think differently. We have to get things in. We’ve
got to test; we’ve got to learn; we’ve got to fail;
and we’ve got to skin our knee,” Steinhafel said.
“We’ve got to try again, try again, try again. And
so we have to value both aspects of that culture
within Target and make sure that there’s room
for both kinds of individuals and that we create
the kind of environment over the long term that
values that digital, fast-paced, risk-oriented,
curious learning environment.” He said Target
will move faster in everything it does. Bigger,
more strategic matters may move forward at a
measured pace, but with other things, “we’ve
just got to get it out there, and just try it and see
what’s going on, or we have to be really a quick
follower or be maniacal about following what our
competitors are doing and learn through their
pluses and minuses.”
Increased segmentation: The thing that
made Target great a decade or two ago — a
uniform and consistent experience across its
store base and merchandise assortment — has
become somewhat of a liability these days.
Shoppers want localized assortments — something Target now understands and is moving
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with haste to address. The company is enhancing its distribution capacity through automation,
opening three new food distribution centers
and integrating new technology to improve the
speed and flexibility of its 37 regional distribution centers. The net effect is Target will be able
to improve supply-chain efficiency and execute
various segmentation strategies. “We now have
the capability to customize the assortment in
literally every store,” said head merchant Tesija.
“In fact, during the last five years, we’ve reduced
the number of SKUs in an average store, but
tripled the number of unique planograms to more
than 375,000.”
Committed to Canada: Things didn’t work
out quite the way Target planned in Canada, with
sales well below expectations, but it’s only the first
year. The fact that the company managed to open
124 stores, establish a distribution system and a
new headquarters operation from scratch ranks
as one of the most impressive feats the retail
industry saw during 2013. Even so, the emphasis
now shifts to operations and the need to more accurately forecast, plan and replenish merchandise.
Target underestimated the challenge of getting the
assortments right in a new market on such a massive scale, but now that it has some sales history
and shopper feedback to analyze, assortments
can be revised and replenishment challenges
should dissipate, with a corresponding improvement in guest satisfaction and sales. At least that’s
how it is supposed to work.
Rethinking the core customer: Moms still
matter, but the changing competitive landscape,
demographics of the marketplace and manner
with which shoppers engage with brands will see
Target reinvent how it appeals to various shopper
segments. “Today, we understand more clearly
than ever that our sweet spot is the attitudinal
convergence of consumers who love to shop, consumers who use technology and consumers who
are deal-conscious,” said CMO Jones. “It’s this
‘digitally connected, time-pressured, savvy mom’
that is our strategic target. But our core guest isn’t
Mom alone. Families are being redefined. More
and more, both parents share household responsibilities — including the shopping. And parents are
involving their kids in decisions, from what to eat
for dinner to where to go on vacation.” Look for
Target to pursue and be more receptive to brandmarketing initiatives that go beyond Mom.
Tough(er) talk on price: Target introduced
its “low price promise” several years ago, and it
has a price-match guarantee like virtually every
other major retailer. And the 5% discount that
accrues to users of the REDcard helps make
Target a low price leader. In 2014, Target plans
to communicate a more aggressive pricing message as it builds on a successful 2013 campaign
called “Essentials,” which sought to drive trips.
For 2014, the Essentials campaign will promote
Target as a destination for everyday shopping as
opposed to simply a stock-up trip. “To do this,
we’ll tap into the cultural truth about the ‘Target
Run’ — which is common language used socially among our guests — and will prominently
feature our shopping hand basket as the icon for
quick and easy trips,” according to Jones. “The
campaign will feature our great national and
exclusive owned brands, and boldly display their
prices in the appropriate channels.”
REDcard rules!: If there is one area where
Target consistently exceeds expectations, it
is with the REDcard program. The REDcard
Rewards program that first launched as a pilot
program in the Kansas City market now enjoys
a roughly 25% penetration rate, while in the rest
of the country, the penetration rate is approaching 20%. As Target moves the rest of the nation
to the rate it sees in Kansas City, its business is
poised to benefit. REDcard guests shop twice
as often as non-REDcard holders and spend
twice as much, according to the company. The
REDcard Rewards program is in addition to the
Pharmacy Rewards program, for which penetration stands at 50%. The combination of the two
is even more powerful, with Target noting that
guests enrolled in both programs spend four
times as much as the average shopper.
Making a difference matters: Companies
who are socially responsible and are perceived as
such perform better than those who don’t, which
is why Target plans to do a better job of telling its
story in 2014. According to CMO Jones, Target
guests don’t fully understand all that Target does
in the areas of community involvement, volunteerism and giving. To change that, Target plans to
embark on its first corporate social responsibility
campaign next year. “It will share our stories using
voices and perspectives of team members and
partners who are out making a difference in our
communities on behalf of Target,” Jones said. “It
is the first time we will broadly share all we do in
addition to education. It’s something we’re incredibly proud of, and we believe it will enhance our
guests’ intent to shop at Target even more.” l