Retail Marketing Strategy: Target Corporation

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Introduction

Target Corporation is a public company founded in 1902 in Minnesota, United States. The company will renowned across the United States for its specialization and ability to provide its customers with customized merchandise at discounted prices on products ranging from everyday essentials to luxury products. Target’s current Chief Executive Officer is Brain Cornell and has annual revenue of $ 78.112 billion. Target is able to provide its customers with their preferred shopping experience as it has a range of fulfillment options including an efficient supply chain, loyalty offerings, and devotion to innovation. Further, Target has adopted a disciplined approach in business management opening routes for growth and its presence in digital channels makes it easier to purchase products. Target holds the position as the third-largest discount store retail operator in the United States after Wal-Mart Stores and Costco Wholesale. As of 109, Target had more than 1844 outlets and 38 distribution centers across the U.S. The purpose of this essay is to develop a retail marketing strategy for Target Corporation.

Target’s Minimal Presence in International Markets.

Target has been experiencing a challenge in expanding internationally. The Company opened 133 stores in Canada between 2011 and 2015 but the $4.4 billion expansion plan is already failing. The expansion decision was met with criticism from the beginning particularly because the decision was made after a short time. Various issues went wrong with the expansion decision. To begin with, the store locations that Target locations opened in Canada are less than ideal. It is alleged that Target acquired over 120 Zeller Stores from Hudson’s Bay Company, a Canadian department store chain back in 2011 which were located downtown in areas that are hard to access. This is according to the Wall Street Journal. The stores opened in Canada were smaller than those in the United States and they used more funds than expected to renovate, expand and redesign to its trademark layout of red and white. Additionally, Canadians complained that the prices were higher compared to those in the United States. According to Brian Sozzi, chief equities strategist with Belus Advisors noted that Canadians living along the border found more value in shopping at Target stores in the U.S or shopping online.

Another issue that came with the expansion of Target stores in Canada was that the Canadian stores were often disorganized and empty. The selection was also limited. A former employee of Target complained that he used to fill the shelves with Tide detergent as there was nothing else to stock the shelves. Worth noting, Target Corporation did not find it easy competing with Wal-Mart, one of its top competitors, which expanded its stores to Canada over two decades ago (Capell, 2019). Essentially, by the time Target was setting up stores in Canada, Wal-Mart was already a household name. Wal-Mart was also willing to invest in pricing compared to Target, which was relatively expensive. Furthermore, Target’s step of launching stores in Canada was termed as overambitious. The decision to set up 124 stores in just 10 months was miscalculated. If within a couple of years of setting up the business would not be enough turnaround time to maneuver, Target would have no option but to close down its doors or cut down the store in half and consider changing locations or starting afresh.

Actionable and Realistic Solutions

Although Target’s move to rapidly expand its stores in Canada was met with criticism, the company can employ various strategies of ensuring it is successful in its international expansion strategy. International expansion is necessary for any retailer that desires to grow to the size of its competitors. Target can do this by revamping the website to allow international shoppers to pay prices that are competitive and also by moving slowly to avoid damaging the company’s reputation. Having an e-commerce strategy and revamping its website is one of the strategies that can help the company stay competitive. A big amount of its revenue is generated on the website. While in 2015 the company invested a lot of capital in improving e-commerce, it is nowhere close to what one would expect from a major retailer from the United States (Chernev, 2020). The company requires more than just a website if its plans to expand its stores and thrive internationally. The company should establish distribution and warehouses in various countries to cut down on import duties and shipping costs. Currently, Canadians making orders from Target have to ship the item from a US-based distribution center which is rather costly. By establishing distribution centers in Canada, the United Kingdom, and Japan, goods can get to any country directly from its original place of manufacture. Another solution would be taking the expansion process slowly. Although permanent stores are ideal, they are nowhere close to the scale which Target was aiming for in Canada. Penetrating the Canadian market requires stores that resample Target Express or City Target locations. The ideal start-up stores would be densely stocked, small, densely populated, and located in urban centers. If they start small, Target would eventually expand to bigger stores in suburban locations. Given how popular online shopping is, opening many locations was overkill. By setting up smaller stores, customers can try merchandise and order for in-store deliveries to their addresses.

Conclusion

Target Corporation is a big box retailer across the United States renowned for its specialization and ability to provide its customers with customized merchandise at discounted prices on products ranging from everyday essentials to luxury products. In the past, Target has encountered the challenge of reduced presence in international markets. This is partly due to the competition from Competitors like Wal-Mart who opened its doors to clients in Canada before Wal-Mart. Target’s failure is also attributed to over-ambition. Its decision to set up 124 stores in just 10 months was miscalculated. Some of the solutions Target should employ is revamping the website to allow international shoppers to pay prices that are competitive and also by moving slowly to avoid damaging the company’s reputation.

References

Capell, A. (2019). Strategic Audit: Target Corporation.

Chernev, A. (2020). The marketing plan handbook. Cerebellum Press.