Executive summary
Target Corporation was incorporated in 1902 and is the United State’s second largest discount
chain (behind Walmart). The “cheap-but-chic” company has over 1800 plus stores across North
America, as well as an online business. Within the last 5 years, Target has began to
carry groceries that offers upscale, trend-driven merchandise that rivals its competitors
Walmart and Kmart.
The company operates in five products categories: Household Essentials (20% of sales), Food
and Pet supplies (more than 20% of sales), Apparel and Accessories (20% sales), Hardlines (
more than 15%), Home and Furnishing (20% sales) (Target).
Target positions itself in the discount retail industry, which is highly competitive. The
target market for this industry is people who are seeking standardized goods at low prices.
Although Walmart is the leader of this industry with $485.14B in revenue for 2017, Target follows
close behind and took second place with $69.5B in revenue for 2017. This is mainly due to the
difference in strategies that each competitor uses. (Vault)
Target has two main competitors: Costco (COST) and Wal-Mart (WMT). Competitors in
this industry must maintain an efficient inventory system and develop a differentiation strategy
in order to thrive. Customer’s disposable income and purchasing power has an enormous effect
on the fluctuations in revenue seen in this industry. Target is the strongest positioned among the
two main competitors with regards to dividend yield at 4.1%, with Walmart at 2.3% and Costco
at 1.2%.
ADD why its successful
History
Target, Corp. with the famous bulls-eye logo is the second largest discount retailer in the
US. The company was founded as Dayton Dry Goods in 1902 by George Dayton, with its first store
opened in Minneapolis, Minnesota in 1962. In 2000, the company was renamed as Target
Corporation to better reflect its core business.
Since the 1950s, Target has been expanding by acquiring smaller discount stores. Today,
the Company has international presence as well as over 1,800 Target and Super Target stores in
the USA. The retailer distinguishes itself from competitors by selling higher-end, fashionable
products at discounted prices. It offers various products from household essentials such as
clothing, kitchen supplies, toys, electronics, seasonal merchandises, and groceries among others.
ADD more history discuss the contemporary success of Target
Description and Analysis
Target’s major focus is to provide a preferred shopping experience for customers through
differentiated products at low prices. Target’s strategy takes a differentiated approach by
focusing on brand image and valuing their customer’s preferences.
How has this approach/product style permitted Target to stand out from competitors
How traditional business was, and how the model has changed?
Since 2017 Target has made significant changes in terms of business strategy.
For example, Target has reduced capital allocation to new stores instead of funneling money into
existing stores and IT supply chain. In addition, Target has begun leasing it’s premises/buildings
relating to future stores. Target’s strategic transformation includes technology enhancements,
supply chain and inventory management automation processes rooted in efficiency.
A key strategy that Target undertaken has been to introduce company credit and debit cards (
RED cards, collectively), which encourages customer loyalty. The program has been extremely
successful boosting sales from 6% in 2010 to 24% in 2017 in spite of the reputational loss suffered
in 2013 due to a major data breach.
This past year, Target acquired the strategic company called “Grand Junction”, a startup company
