Target is one of the most popular retailers in the supermarket segment. Known for its iconic logo, trendy product lines, and fierce brand loyalty, it appeals to cost-conscious buyers while still providing products that seem more premium than can be found at other retailers. At a glance, it seems that there can be no downside for Target, but there are still some potential weaknesses that can affect this company.
Let’s look at the strengths, weaknesses, opportunities, and threats for Target.
1. It offers a wide range of merchandise and product lines.
Like other supermarkets retailers such as Walmart, Target offers a huge variety of product lines – including apparel, grocery, health and beauty, electronics, toys, and much more. Creating a one-stop-shop for customers is very appealing, and Target has fine-tuned its operation to provide customers exactly what they want all in one place.
Target’s North American revenue was $93.5 billion. (Statista)
2. Its brand is uniquely positioned in the market.
Target has some advantages over key competitors like Walmart, but most important is the perception (and, in some ways, the reality) that its products are more premium. Walmart is known for offering products at the lowest prices, but the quality is sometimes lacking.
Target’s offerings are typically considered more deluxe while still being affordable. The variety of products offered is also greater than baseline options, giving shoppers more choices as well.
Target is the third-largest general merchandise store in the world. (Statista)
3. Target’s customers are intensely loyal.
Shoppers at Target will often find everything they need there, and will avoid competitor stores wherever possible. Target has created a solid customer base upon which the company can rely, and customers are often the strongest brand advocates, which is invaluable for any brand.
Target is in the top 200 of global websites with the most traffic. (Sem Rush)
4. Customers enjoy their shopping experience.
Another key aspect of customer loyalty is a positive shopping experience. While online sales are growing, the in-store experience is still favored by most customers. They often know the layout of the entire store by heart, and are always on the lookout for deals and new products when shopping. Such positive emotions from customers make an otherwise mundane trip to the store into an enjoyable and much-anticipated experience.
Eighty-two percent of Target’s U.S. sales were in-store purchases. (Statista)
5. It has formed key corporate partnerships.
The vast majority of Target locations have a Starbucks retail location at the front of the store, offering another key customer favorite that keeps shoppers returning. This partnership has helped both brands succeed. Also, several years ago, CVS took over operations of all Target pharmacies, creating another tight synergy between two brands that were already powerhouses. These kinds of partnerships increase the bottom line for everyone at the table.
Three-quarters of all Target employees live within 10 miles of their store. (Target)
6. It offers lots of private-label brands.
Like any retailer, Target offers private-label brands, or competitors for the vendors it stocks on its shelves that are exclusively made by and/or for that retailer. These products are typically offered at lower prices than the competition, with a greater share of those sales profits going back to the retailer itself. Target’s private-label brands include exclusive fashion lines, grocery brands, and more, and loyalty to those brands is very strong for many shoppers.
Target has 48 private-label brands. (Target)
7. The brand appeals to younger customers.
A key market to capture is younger shoppers, and Target excels in this arena. Trendy fashions in its clothing lines, an attractive and sociable shopping experience, and the feeling of belonging to a special customer club attract many in the younger demographic, which includes students and young adults as well as younger parents. Other demographics are important to the brand as well, but these younger segments of the market comprise a powerful segment of the overall customer base.
Nearly 18% percent of Target’s U.S. sales were from online purchases. (Statista)
8. It has moved more into digital and online services.
While it has been slower to capitalize on online sales than other retailers, Target is nonetheless making great strides in online shopping and delivery. Custom apps, loyalty and rewards programs, and in-store credit lines all make shopping with Target easier and more appealing, often making customer bonds even tighter.
Target was the sixth-largest online retailer in 2019. (Statista)
1. Its prices are slightly higher than competitors.
Unfortunately, the price of a loaf of bread, a gallon of milk, or some other commodity can sometimes be the determining factor when choosing where to shop. In this way, Target does have a disadvantage when compared to the competition. Despite the air of relative affluence when compared to true “budget retailers,” the costs can be slightly higher, which can turn some shoppers away. This is something Target must consider when appraising its overall brand benefits.
Overall global retail sales reached $26.7 trillion. (Statista)
2. It has fallen prey to data security issues.
Target has been involved in a number of high-profile data breaches over the past few years. It is critical to keep customers’ online account data secure, and losing control of that security can cause major problems when it is compromised.
Perhaps even more importantly, Target offers credit services, and those accounts have been hacked as well, which exposes even more sensitive aspects of customers’ financial data. Keeping these breaches from occurring will be key to staving off negative press.
Target had $4.3 billion in net earnings from the United States market. (Statista)
3. It does not have much of an international presence.
Target relies quite heavily on its North American market, and does not have much of a presence in other countries. Keeping this market strong will be critical to its success, but any slips can have major ramifications to the corporation at large. Target must consider this over-reliance on a single region, and look to other parts of the world as it considers its corporate growth strategy.
Target experienced 19.8% growth in sales in the United States in 2020. (Statista)
4. It faces competition from smaller & local stores.
As a “big-box retailer,” Target can also face competition from smaller retailers. The movement to shop from local & smaller vendors has gained major ground in recent years, and any supersized retailer could potentially face criticism or backlash for barging in on their operations. What’s more, some products can only be purchased by smaller vendors, or in some cases may be found at a higher quality or with premium features. Whatever the case, sometimes bigger is not always better.
California is the U.S. state with the greatest quantity of stores. (Statista)
5. Despite positive strides, it has struggled with online sales.
Some vendors like Amazon are purpose-built to sell their wares online. Target has been relatively late in streamlining its online presence to create a seamless virtual buying experience. Problems with its app or website have caused site crashes, and fixing these problems will be key to continued success in online sales.
Target’s website had 136 million users generated from search traffic. (Sem Rush)
6. There is some lack of product line diversity.
Target does offer a wide range of product lines, but there are some offered by other brands that Target does not have. While this may not seem like a major pitfall, it nevertheless gives some other brands a competitive advantage in this space. When shoppers consider that other vendors offer services like gas stations or auto service centers (as some examples), this can be a disadvantage to a company like Target that offers neither.
Target’s stock price has grown 322% from 2016 to 2021. (Yahoo Finance)
1. It could open more smaller stores.
Target operates some smaller retail locations in addition to its superstore models. Certain customer segments may prefer this shopping experience to visiting a massive storefront, and creating strategic growth in this sector could be a great avenue for reaching those customers.
North American revenue for Target stores has grown 78% from 2005 to 2020. (Statista)
2. It could continue and boost its use of customer loyalty programs.
Much of Target’s brand loyalty comes from its programs that reward customer loyalty. Its in-house credit services offer standard discounts on every purchase, and other rewards programs bring additional savings directly into the hands of consumers. Finding the right ways to fine-tune and grow these programs means that more people will want to shop at Target in order to save even more money.
Target’s mobile app, Cartwheel, had 27 million shoppers. (TechCrunch)
3. It could move into same-day delivery.
More and more retailers are embracing same-day delivery or similar models to satisfy consumer demands. While this can be a logistical nightmare and must be implemented well from the start in order to remain viable, Target could enter this lucrative service area to match what shoppers are asking for. Many people would pay a hefty premium in order to receive their online purchases on the same day, getting the in-store experience of having their purchases almost instantaneously while taking advantage of the convenience of online shopping.
Target’s strongest U.S. sales segment is beauty and household essentials, with a 26% share of its overall sales. (Statista)
4. It could expand its private label brands.
The company has already found its sweet spot with private-label brands, but continued improvements and expansions of these brands will appeal to even more shoppers. Standard offerings and collections could be expanded, and even more products could be offered. When shoppers consider that most of these products are typically offered at a lower price versus other brands, this can generate an even stronger appeal for Target’s in-house brands.
Target donates 5% of all of its profits to local communities. (Target)
5. It could position its branding to the urban market.
Some of Target’s brand perception focuses on the suburban family, or on younger buyers. Big-box stores are also not always found in larger, more densely populated urban areas either. However, Target could move into this market to attract sizable groups of urban shoppers in particular ways that could grow its customer base with relatively minimal investment.
Target has over 350,000 employees. (Target)
1. It continues to face strong market competition.
Brands like Walmart, Costco, Amazon, and more are usually said in the same sentence as Target when considering the type of retail space these companies occupy. Creating distinctive offerings and unique appeals is key for any and all of these retailers in order to edge out the competition, and Target is no exception. It cannot afford to rest on its laurels, but must continue to evolve and reach new customers in order to remain successful.
Target had $78.1 billion in worldwide sales. (Statista)
2. It could become prey to an overall decrease in consumer buying power.
As a retailer that offers even marginally more expensive products, Target must insulate itself as much as possible from any downturn in the overall consumer economy. When buyers have less disposable income, they will find ways to cut costs, and often that means finding cheaper alternatives for the things they buy. Target should find ways to mitigate these types of cutbacks wherever possible.
Target opened its first store in 1962 in Minneapolis, Minnesota, where its corporate headquarters currently resides. (Expanded Ramblings)
3. Online shopping is still stronger with other retailers.
Target is getting better at online retail, but it has a long way to go before it can catch up with the likes of Amazon and other online-exclusive brands. These companies have the infrastructure and corporate power to advance much more quickly in online shopping, so Target should find specific ways to hone its competitive advantage in the virtual retail space.
Target’s mobile app, Cartwheel, helped account holders save over $600 million during its first three years of operation. (TechCrunch)
4. Customer preferences are continually changing.
As a “trendy” retailer, Target must continue to stay on top of the latest fashions and styles, as well as offer products that appeal to a wide range of consumer tastes. If it stagnates in any one of these areas, it will lose customers quickly.
Target operates 1,897 stores. (Statista)
5. There are little to no barriers to entering this market.
At a certain level, anyone could become a major retailer by copying the business model of offering everything consumers want under one roof. While this may seem like an insurmountable goal that will take significant time and capital, it is an unfortunate truth of this market segment, and Target must always remain at the top of its game in order to stave off competition from a newer company that may enter the market.
Target has the 30th most popular website in the United States. (Sem Rush)
Target has a powerful brand that is bolstered by strong consumer loyalty and numerous private-label brands, but it faces stiff competition from other retailers and can fall victim to fickle consumer trends. By appealing to more and more customers and rewarding its current base, Target can continue to grow and be the one-stop-shopping choice for those who want the best of style, variety, and value when they go to the store.
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