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Target

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by

Amanda Kolmerten

on 16 April 2014

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Transcript of Target

History
Minor Problems
Recommendation and Implementation
Alternative Solutions
Major Problem
1902 family owned Dayton Dry Goods was established, by George Dayton.
1960 Donald Dayton, grandson of George, of made it the largest single family owned discount store chain in Minnesota.
1962 became Target Corporation and launched the famous bullseye. This is the same year Wal-mart opened first store.
1966 opened a Target outside of Minnesota, Denver, CO.
1979 now has 74 stores in 11 states, "planogram". Wal-mart has 276 stores.
1995 started the Target Credit Cards.
2012 celebrated 50 years as Target, now have 1,924 stores. Wal-mart 11,137.
•Credit Card security breach (more than once)

•Slower growth compared to competing retail merchants

•Too big? Stores in the United States, Canada, India, and Australia
I doubt any corporate executive would argue that his/her firm is "too big". A real issue is "Too big too fast", which has sunk many a start-up and effected shareholders negatively.

•Too fast - rapid expansion into Canada 2013.

•Large company layoffs stemming from the security breach foster ill-will.





1. Do Nothing - Give it time...let things fall into place

Pro’s:
Requires no additional effort
Requires no additional investment
Product sourcing and inventory levels may improve on their own once the company gets its footing
Canadian consumers may eventually start to frequent the stores on their own
Canadian consumers may eventually learn to shop at Target for their everyday needs, and no longer view it as a department store.

Con’s:
Target Canada could continue to suffer poor customer perception generating more negative word-of-mouth
Target Canada will continue to lose money, further diluting company’s financial performance
Continued weakness makes the segment vulnerable to buy-out
Could bankrupt the segment
Shareholder sentiment impacted negatively





The biggest problem for Target Corporation is its Canadian subsidiary, Target Canada Co., which experienced first year losses of nearly $1billion due to ineffective project management.




Prepared by: Carrie Hurd, Amanda Kolmerten, Bernadette Kosins and Trisha Rhoades



Canadian Subsidiary 2013 Performance
(-$941m)
SWOT

Weaknesses

Guest and Stakeholder Perceptions at Risk...
Perception that their products are more expensive than those of other discount retailers
Outdated data security technology leaves “guests” vulnerable to additional attack
Reduction in company buying (halted buy-backs)

Corporate Terminations Leave The Firm Short-handed
On January 22, 2014, terminated 475 positions at its offices globally

Canadian Subsidiary First Year Performance Dismal
Apparent lack of buying power or expertise leads to a lack of product/brand depth and near empty shelves in Canadian stores
Insufficient market research and/or marketing/advertising in the Canadian market
Cumulative affect of Canadian subsidiary's first year performance dilutes Target's overall performance by (40) cents in the fourth quarter compared with prior guidance of approximately (45) cents. 2013


6. A combination of Alternatives 3, 4 and 5, in addition to conducting new marketing research, improving store development plans, and an improvement in brand management


a.) Improve Store Management: Restructure Canadian brick and mortar stores by reducing and/or reorganizing floor space; reducing and/or reorganizing shelving units; increasing brand selection; increasing inventory levels; and introducing new/additional product categories - including fresh produce in response to previously conducted consumer surveys.


b.) Conduct New Market Research: Continue to conduct new customer surveys to learn more about Canadian customers’ likes/dislikes about existing store’s and offerings. Respond to demand by implementing desired change(s) whenever possible. Utilizing survey participation rewards such as in-store and/or online discounts will provide trial patronage and stimulate sales.


c.) Brand Management: Reposition the brand in the Canadian market. Build brand awareness and improve brand perception by educating the consumer about the Target brand offerings - specifically to educate/entice Canadian shoppers toward weekly visits for more than their department store needs. Target must be marketed as an “all-you-need and more” store. Consistently communicating this message will correct Canadian customers’ perceptions of the brand and stimulate change in shopping habits. [This must also be communicated and coordinated with the firm’s advertising team(s) (See “e” below). ]


d.) Create the Ability to Make Online Purchases: The Canadian online store should be fully functioning by end of Q2 2014.


e.) Strategic Advertising Campaign: Create Lifestyle advertising promotions for traditional (Billboards, Direct Mail, Radio and Network Television Broadcast, and Cable Television spot ads, etc.) and social media sites (Facebook, Twitter, etc.). Ads should specifically target the desired demographic’s most likely place to view them , e.g. surrounding their most watched network and cable television programming and times, morning commute, radio programming, social media, etc. Ads should include merchandise consistent with women’s everyday shopping needs, such as make-up; toiletries; infant care; baby and childhood development toys; kitchen and home furnishings and decor; electronics; over the counter (OTC) health aids; pharmaceuticals; clothing; groceries, seasonal items, etc.

[We need additional slides here. Each point can be trimmed down to just the description and a few key points]
We also need slides for the other alternative solutions, although I think we have too many. To do nothing or Pull out of Canada are wasted alternatives, whcn you consider we only need three and have plenty of real needs to address, like providing internet purchase options, increasing brand depth in canadian stores, creating targeted advertising campaign to announce store improvements, online shopping, and to improve consumer awareness and affect shoping habits.




Threats

• Additional security threats to financial data until new technology is implemented
• Promise of “zero liability” for card holders whose information was compromised in the security breach could see a ~$165m insurance tap or more
• Consumer perception damage due to security breach and other social issues
• Part-time employee healthcare discontinuation may threaten employee morale and/or discourage quality new hires
• Unresolved tensions with The National Association for the Advancement of Colored People (NAACP)
• Unresolved tensions with the Equal Employment Opportunity Commission (EEOC) due to alleged violations of Title I of the Americans With Disabilities Act (ADA) and Title I of the Civil Rights Act of 1991 may garner consumer criticism.
• PVC and lead-containing products from suppliers may not be disclosed or overlooked, resulting in costly fines and arbitration


SWOT Analysis
SWOT Analysis
SWOT Analysis
SWOT Analysis
Strength In Development and Brand Equity
2nd largest discount retailer in the USA
Headquarters in Minnesota, Canada and India
36th on the Fortune 500 as of 2013
Part of Standard & Poor's 500 Index
1,797 stores in 49 U.S. states
Target, SuperTarget, City Target, PFresh and TargetExpress
Strategic and exclusive food distribution alliances
SuperValu, FreshPack Produce Inc.
C&S Whole Grocers for SuperTarget and PFresh Stores
37 Regional distribution centers, 4 Import Warehouses, 5 Fulfillment Centers
127 Active Locations in Canada
Bulls Eye Trademark
provides 97% brand recognition
Financial Strength Through Diversification

Leaders in Philanthropy
Strong Social Capital / Diversity-Minded
Environmental Consciousness and Accountability

Opportunities

Lead the US in implementing chip-based card technology
Lead the US in implementing Mobile payment technology
Lead the US in implementing Biometrics technology
Capitalize on Olympic athlete (endorsements)
New designer, celebrity and sports figure endorsements and/or sponsorships
Add produce sections to Canadian stores per consumer demand
[ Any others you can think of?]
Full transcript