 Value
Added
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Moving Images
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Wallpaper
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Management Implementation
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Interactive House Tour
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| Introduction
Target
Stores, based in Minneapolis, Minnesota, serve customers at 1,055 stores
in 47 states nationwide by delivering today’s best retail trends at affordable
prices. Whether visiting a Target store or shopping online at target.com,
guests enjoy a fun and convenient shopping experience. They have
access to thousands of unique and highly differentiated items.
The retail chain has created a cult of
brand loyalists with hip, irreverent ads and high-end designer items at
decent prices. They provide products like Michael
Graves designed teakettles and answering machines. Investors,
however, are not reacting in the same manner. They are treating the
stock like a pair of last year’s capri pants in the markdown bin.
The shares now trade at $27, which is roughly where they were a year and
a half ago. A strong e-commerce plan and more stores are likely to
go over well with the Target faithful, but will it stand up to the test
on Wall Street?
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Target
Corporation
Target
Corporation is a growing company focused on general merchandise retailing.
Their principle operating strategy is to provide exceptional value to consumers
through multiple retail formats ranging from upscale discount and moderate-priced
to full-service department stores. Target Stores are at the center
of Target Corporation’s retail empire. Formerly known as Dayton Hudson
Corporation, the principle activity of the Group is merchandise retailing
carried out through Target, Mervyn’s, and The Department Store Division.
Target is an upscale discount chain located in 47 states; Mervyn’s is a
middle-market promotional department store located in 14 states in the
West, South, and Midwest; and The Department Stores are traditional department
stores located in 8 states in the upper Midwest.
  
The Group operates Target, a discount chain
of 1,055 stores. Target and its cousins, including SuperTarget and
Target Greatland, have carved out a niche by offering more upscale merchandise
than their rivals Wal-Mart and Kmart.
The company’s second business segment is Mervyn’s, a moderate-priced family
department store providing fashionable name-brand and private-label casual
apparel and soft goods for the home through 268 stores in 16 states.
The company also operates Department Stores, which provides fashion leadership
and superior service through 63 Dayton’s, Mervyn’s,
and Marshall Field’s
stores in 9 states. Target Corporation also owns catalog retailer
Rivertown Trading and apparel supplier Associated Merchandising Corporation.
Target accounted for 79% of its 2000 revenues; Mervyn’s, 11%; Department
Stores, 8%; and other, 2%.
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| Target
History
Unlike most mass merchandise providers,
Target is a department store with roots. In 1961, Dayton’s department
store saw the need for a store that sold less expensive goods in a quick,
convenient format. This was the beginning of Target. In 1962,
the first Target store opened in Roseville, Minnesota. It was the
first retail store to offer well-known national brands at discounted prices.
During the 70’s Target paved new ground
by implementing electronic cash registers storewide to monitor inventory
and speed up customer service. They also began hosting an annual
shopping event for seniors and people with disabilities, as well as a toy
safety campaign. In the 80’s they continued to open new stores and
they rolled out electronic scanning nationwide. The 90’s launched
the first Target Greatland store. The Club
Wedd bridal gift registry went nationwide in 1995 and the Lullaby
Club soon followed. The first SuperTarget
store opened, which combined groceries and special services with a Target
Greatland store. They also introduced their credit card, the Target
Guest Card, which is issued by Retailers National Bank, an affiliate
of Target.
In early 2000, target.direct, the e-commerce
and catalog division of Target Corporation was born. The business
combined the e-commerce team at the company with its direct merchandising
unit into one integrated organization. It combined the Target store
shopping experience with the services customers expect. Since then,
target.com has expanded to include over 15,000 products and gifts, Club
Wedd and Lullaby
Club, Target
Pharmacy, Target Guest Card and
more. Target.direct also operates marshallfields.com, mervyns.com
and catalogs and Web sites: Seasons,
Wireless,
Signals, and IloveADeal.
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| Approaches
and Innovations
Target stores strive to be the best place
to buy high-quality merchandise at low prices in a surrounding that makes
shopping fun. A recent USA
Today poll found that Target is “in”. It’s the place to find
the latest trends at the best prices. They provide employment for
approximately 214,000 people and their growth strategy translates to financial
successes in the billions.
Target is always searching for new and
innovative ideas to keep their customers satisfied with original services.
Some of the current services that Target is now offering to its customers
are: A virtual Holiday Tour to discover the lastest in home decor (click
here
to go on tour); a survey to discover what kind of gift giver you are and
get great gift ideas; a wish list that keeps track of what everyone wants
and lets you know the people, dates, and occasions that you need to remember;
the hot items on everyone's list in one easy-access location; fun Hanukkah
gift ideas; the chance to win the Philips Home Cinema System during the
premier of Malcom in the Middle; the selection of the latest video
games; apparel from the movie Monsters, Inc.; and free gift wrapping
for the perfect gift from target.
    
    
Target is also currently involved in some
innovative mergers that will help get the name out there and boost sales.
One of the new ventures is interactive “watch and win” experience that
they are providing along with Philips
Electronics during the FOX Emmy-award winning television series Malcolm
in the Middle. 
Not only will viewers enjoy the show, but they will also have a chance
to win a giant TV. Viewers will have an opportunity to win a grand
prize Philips FlatTV Home Entertainment system or one of 5,000 $10 Target
gift cards. To win, consumers must spot the Target Bullseye Design
in the show’s premier and log on to target.com to answer questions related
to the location of the Target Bullseye Design in the episode. “Target
is known for its connection with its loyal guests both in stores and online,”
said John Remington, vice president of events marketing and communications
for Target Corporation. “Our involvement with this popular TV show
will reinforce that direct connection. Plus, the show is fun and
on the edge…just like Target."
Along with the interactive online venture
that Target has entered, is the combination of Target merchandise and Amazon.com. .gif) This
goes along with Target’s innovative approach to reaching as many customers
as possible. On October 31st Amazon.com Inc. started selling merchandise
from Target Corporation. It combined the online savvy of the largest
Web store with the retail knowledge of one of the largest traditional chains.
The new offerings, which are showcased on Amazon’s Web site by a photo
of Target’s dog mascot with the company’s trademark red bull’s-eye, expands
Amazon’s selection to include furniture, clothes, and jewelry. The
stocks of both companies rose amid gains in the wider markets. Amazon
and Target said they were teaming up in a five-year alliance in which Amazon
will receive sales commissions and annual fixed fees, while Target will
get access to Amazon’s technology and base of more than 30 million customers.
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| “Shoppers
Love Target, But Shareholders Are Seeing Red”
Although Target possesses some of the most
loyal customers in the market, investors are not putting much value on
its stock. Daniel Barry, an analyst from Merrill Lynch thinks the
drastic differences in opinion are coming from his belief that all retail
stores are suffering from increases in interest rates, which have slowed
consumer spending. On top of that, the economy is coming off a two-year
period of above-average spending, one that Goldman Sachs analyst George
Strachan calls “the best and most sustained growth since the mid-60’s.”
No matter what happens to rates, as spending returns to more typical levels,
retailers will probably see sales level off.
Target has some problems that are unique
to its own operations. The other divisions of Target Corporation
are dragging down the rest of the company. According to Barry, “The
reason this stock is so much cheaper than Wal-Mart
is because of Mervyn’s.” Instead of removing it from their operations,
they are going to rely on Target to boost revenues and profits. Their
new plan consists of two strategies: opening new locations and selling
through the Internet.
Concentrating on the Northeast and Mid-Atlantic
markets, Target plans to double the number of its stores to 1,800 in the
next ten years and increase the number of SuperTargets to 200. As
for the Internet, they believe that the key is controlling its own product
delivery. They bought the mail-order company Rivertown Trading in
1998 to manage its distribution and while revenues from Web sales are low
right now, there is great potential.
The implementation of these two strategies
will go well with its faithful customers, but the true test lies on Wall
Street. Targets earnings have grown between 20% and 30% annually,
but traders still punish the chain because of the perception that it is
an also-ran to Wal-Mart, says Gary Balter of DLJ Securities. “This
is a smart company that doesn’t yet have the national exposure that Wal-Mart
has.’’
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| Target
and The Expectancy Theory
Target has decided to open 200 SuperTargets
in the next ten years. SuperTargets add groceries to Target's original
inventory, a concept called "fashion-to-food." DLJ Securities analyst
Gary Balter says that, "Target has shown its volumes in the SuperTargets
to be fantastic, and the return on investment is higher already thatn that
of a Target." Target expected that develping a store that combines
apparel with food would please the Target customer. The instrumentality
is that this new innovative idea implementing the Expectancy
Theory would lead to high sale performance. Target plans on adding
$10 billion to the company's revenue with the addition of SuperTargets,
which is the valence.
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| Target:
The Analyzer
Out of the four of Miles
and Snow's Adaptive Strategies, Target would be an analyzer.
Analyzers are a combination of Defenders and Prospectors. Even though
Target is more of a Defender because it is a large company that defends
market share, it is also a Prospector because it continuously tries to
think of innovative ways to make the customer happy. An example of
this is the new SuperTarget.
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