COMMENTARY: Target in the New Year
Commentary By: David
Issue: What next for Target?
“When Alexander saw the breadth of his domain he wept, for there were no more worlds to conquer.” - Plutarch, Moralia
If almost nobody seems jolly on the agency side of advertising this year, at least one advertiser has reason for cheer. Target reported November sales up 9% from a year ago with year to date sales improving even more; up 12.2%. (Click here for the data) Same-store sales grew at a blistering rate of 5.8% for the year (2.6% in November). Compare these figures to the numbers we posted on Burger King yesterday (click here), and you’ll see how special this growth is among established retailers. Even more surprisingly, Target’s growth surpassed Wal-Mart’s, which reported year-to-date growth of 9.8% (click here for Wal-Mart data).
The real story for Target is not the growth itself, but how they achieved it. Target made a push this year to own “Design for All” (click here to see the TV spots) and was spectacularly successful. This is an important brand positioning, and one that makes them the envy of their retail neighborhood. Why? Because Target has created an ownable difference from low-cost leader Wal-Mart and may be the second chain after Costco to show how Wal-Mart can be beaten. Making design the ownable difference between the two chains also gives Target the opportunity to avoid direct pricing competition - as long as Target’s prices remain competitive it will be the destination store for many shoppers.
This success is not the product of a year but rather the product of a decades worth of focus around the affluent value shopper. And Target was not without competiton. K-Mart seized on Target’s early moves in this direction to create a strategic alliance with Martha Stewart, whose innovative contributions to the middle class style vocabulary may have saved K-Mart from extinction (by making it a worthwhile takeover target for private equity baron Eddie Lampert). K-Mart lost this battle because they wanted to have it both ways, simultaneously contesting Wal-Mart for price leadership and Target for design sense. But step by step, from Michael Graves teakettles to Isaac Mizrahi tweed blazers, Target built a unique brand.
All of which leads this advertising blog to an intriguing vision of Target’s future. Which would be for Target to lead us out of the era of mass retailing.
For many years the great conundrum of retailing is that chain retailers possess a great deal of information about their customers and do very little with it. Yes, Wal-Mart probably knows that people buy more de-icing fluid in Michigan and more sprinklers in Texas. I am told that the Target store in the Hamptons is a lot more upscale than the one in the Bronx. But go around the country from Wal-Mart to Wal-Mart - or Target to Target - and you’ll know that you are in more or less the same place with more or less the same stuff.
This is not accidental. McDonald’s taught marketers that brand consistency in retail outlets was the path to riches. Give people a dependable, consistent experience and they will reward you with repeat business.
But Target can do more. This advertising blog can imagine a future where every Target looks different, feels different and has different designer merchandise. “Did you go to the Target in Dallas during your vacation? I hear they have some amazing kitchenware designers for that store.” Target is in a position to offer the American consumer the Pottery Barn feeling (nice, cool looking stuff for your house) without the Pottery Barn double-take (when you walk into someone else’s house and see your own living room).
Yes, it is true that Crest will still be Crest and 16-rolls of Bounty paper towels will still look and cost the same in each Target around the country. But imagine a future where each store was designed to reflect the community rather than casting a reflection on the community. Where each Target would have a substantial number of unique design items found in no other store and no other Target.
Imagine a future where a talented young jewelry designer could make a living selling unique pieces in one Target store. Where every F.I.T., Pratt and R.I.S.D graduate would have a chance to launch her career by designing for a local Target. And most importantly where every community could feel that their Target was their own - unique and differentiated. Target would still provide a consistent brand experience through design philosophy, customer service and core consumer packaged goods offerings.
Design for all could translate to design for every one of us. Individually. This would present a purchasing task the scale of which has not been known since Imelda Marcos last visited Bloomingdales. The operational issues would be immense. But the rewards for Target and for American consumers would be no less so. After a generation of losing boutique retailers to chains, a chain would finally have rediscovered its inner boutique.
Target can do many things with the momentum it has established. But the chance to remake retailing could give Target a unique and long-lasting position in the American cultural landscape.
