3. Question…
Who shops at Target?
Why do you shop at Target?
Low-price, Comfortable,
high-quality, One-stop shop, fun, and safe
well-designed large selection shopping
merchandise environment
10. Financial Performance
Yearly Total Net Income
3500
3000
2500
2000
1500 Total Net Income
1000
500
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
11. Product Categories
Household • Pharmacy, beauty, personal care
• Toys, electronics, music, movies, books, sporting
Hardlines goods
Apparel and • Apparel for women, men, boys, girls
Accessories
Food and Pet Supplies • Dry grocery, dairy, frozen food, beverages
Home Furnishings • Furniture, lighting, kitchenware, small
and Décor appliances, home decor, bed and bath
12. Service Category: REDcard
Financial service: Debit/Credit card
Target REDcard
Offers great discount
Free shipping
Donation to education
Extra savings on prescriptions
No annual fee
13. Competitive Space
Apparel
Ross, Kohl’s, T
J
MAXX, Marshall’s,
Costco
Toys
Pharmacy
ToysRus, Disney
CVS, Costco, Rite
Aid, Walgreens, Cli
Target Store, Amazon, EBay
, Learning
nic Pharmacies Express , U.S. Toy
Co., Inc., Barnes &
Noble Inc.
Grocery
Costco, Ralphs, Al
bertsons, Food 4
Less, Vons, Stater
Bros
16. Mission
Mission Statement:
“Our mission is to make Target the preferred shopping destination for our guests by
delivering outstanding value, continuous innovation and an exceptional guest
experience by consistently fulfilling our Expect More. Pay Less.® brand promise.”
Major Commitment:
Continuously
Meet the cater to the
guests’ needs guest
experience
17. Values
Core Values:
Diversity Teamwork Community Innovation Service
these values are ingrained in the culture
Integrity = most important moral value
Within the company, culture is transferred to all:
Vendors, Part Times, Seasonals, Etc.
Fifty”
“Fast, Fun, and Friendly”
18. Organizational Structure
Distribution Center: General
Manager
Senior Group Senior Group
• One GM per building Leader Leader
• SGL:
Group Group Group
Performance, Strategic Leader Leader Leader
Planning
• GL: 2-12+ Team Team
Member
Team
Member
Team
Member
Members, Monitor
Performance and Team Team Team
Member Member Member
Development
• Team Members Team
Member
ERA 1
Structure transfers to all areas
19. Organizational Culture
Process-Oriented
Concern with getting things done with integrity
Employee-Oriented
Deeply concerned with the wellbeing of employees
Professional
Embrace diversity in the hiring process
Open System
Welcoming to new employees, orientation persistence
Loose/Tight Control
Improvisation welcomed, yet training programs enforced
Pragmatic Orientation
Driven by the market, desire to meet guests’ needs
20. Fulfilling Target’s Values
Customer Satisfaction
Action Plans: Message + Training
Orientation Overviews
Modeled Top-Down
Working on a Team
No Guesswork Involved
Guest Service Departments
21. Diversity
To promote diversity:
• Embrace team member differences
Individual and Community
• Foster a feedback culture
Weekly meetings
Upward Communication
• Diversity Events
Ex: Chinese New Year at Downtown Riverside
Second Nature, Inclusive
24. Wellbeing Pillars
Individual Community Social Financial
Safety Outreach Celebrations Tuition
Healthy Living Service Recognition Reimbursement
Exercise Events Financial
Planning
26. Here For Good
• Sustainable Living
• Energy Smart
• Smart Development
• Green roofs, Urban Stores
• Sustainable Products
• Traceable seafood, Packaging
• Efficient Operations
• LED lights, motion centers
29. Trends to Watch
Social Consciousness
Longer Life Span
Green Practices
Target is on track to staying ahead of these trends with their
commitment to individual and environmental sustainability
32. Market Share
Discount Department Store
Market Share, 2010
Dollar
General 2010 Sales (in billions)
3% Others
Walmart 258
Kmart 14%
3% Target 67
Costco Walmart
Costco 60
12% 54%
Kmart 16
Target
14% Dollar General 13
Others 66
33. Prospector, Analyzer, or Defender?
Target = Analyzer
Stable, routine, and efficient in its product
market domains
Closely watches competitors and rapidly
adopts promising new ideas
35. BCG Matrix
Toys
• Toy industry is
expected to
shrink
• Target is among
the top 3 toy
retailers
• Target is in a
leading position
in this segment
36. BCG Matrix
Apparel
For 2009-2014, the
estimated growth rate is 2%
Target’s sales in 2009 were
6.7B, representing a 4%
market share
Target’s market share in the
industry is not
dominant, but the market is
fragmented
37. BCG Matrix
Grocery
Grocery retailing is a
mature, saturated
market in the US
Target’s grocery sales
in 2011 was
13.27B, representing
a 1.6% market share
38. BCG Matrix
Pharmacy
The US pharmaceutical
industry is expected to
grow at a rate of 6.4%
in the next 5 years
The industry growing
fast but Target’s share
in this market is small.
39. 5 Forces Analysis
Threat of New Entrants
Apparel: High
Pharmacy: Moderate
Toys: High
Grocery: High
Bargaining Power Bargaining
of Suppliers Power of
Apparel: Moderate Customers
Pharmacy: High Rivalry: High
High
Toys: Moderate
Grocery: Low
Threat of Substitutes
Apparel: High
Pharmacy: Low
Toys: High
Grocery: Moderate
40. Threat of New Entrants
Threat of New Entrants
Apparel: High
Pharmacy: Moderate
Toys: High
Grocery: High
Capital
Market Share
41. Bargaining Power of Suppliers
Bargaining Power of Suppliers
Apparel: Moderate Exclusive Brands
Pharmacy: High
Toys: Moderate Commodities
Grocery: Low
42. Threat of Substitutes
Designer/Used Clothing
Music/Video Games
Grocery Delivery
Restaurants
Threat of Substitutes
Apparel: High
Pharmacy: Low
Toys: High
Grocery: Moderate
43. Gaming Population
Gaming Population vs. Actual Population
(Ages 2-17) in the US in Millions
73
71
69
67 Gaming Population
Population in Millions
65
(Ages 2-17) in the US (In
Millions)
63
Population (Ages 2-17)
61 in the US (In Millions)
59
57
55
2009 2011
44. Bargaining Power of Customers
Variety of Discount
Bargaining Power
Stores is Large of Customers
High
Low Switching Costs
49. Factors to Watch For
Macroeconomic Conditions:
Consumer
GDP Confidence CPI Income
Other Factors:
Online Retail Population Birth
Sales Growth Growth Rates
Three bubbles = distinctive competencies *High-Quality and well-designed merchandise at low price*Comfortable and fun shopping environment. The comfortable environment also includes in good customer service.*Created Synergy: Target Redcard=> guest loyalty, sense of commitment, and motivation, Target Gift cards=> Target higher sales.Target sells more gift cards than any other retailer in the United States and is one of the top sellers, by dollars and units, in the world. The unique designs of their cards contribute to their higher sales, as well as Target's policy of no expiration dates or service fees.*Good brand reputation because of charity and community giving. People think Target as philanthropic company, so they are more willing to go to Target store to purchase its products. *Organized company inside training systems to develop more outstanding leaders and employees. Leadership training program. For example. Nomination-based leadership development programs for high-potential leaders at a variety of levels throughout the company include week-long assessments, year-long development series and shorter development programs.*Rigid criteria for selecting suppliers.Target Corporation Supplier Diversity Initiative requires that you be registered with us as an identified or certified as diverse business enterprise for assistance from the Supplier Diversity team, such as: National or Regional Minority Supplier Development Councils (NMSDC),Women’s Business Enterprise National Council (WBENC)U.S. Small Business Administration (SBA),Veteran/Disabled Veterans(VOB). It also has self-certification such as: History of proven successful projects, Financial Stability,Understanding of Target Corporation’s business and practices, and Ability to provide high quality, cost competitive goods Electronic Data Interchange Capabilities (EDI)
In 1902, George Dayton build Dayton Dry Goods Company in downtown Minneapolis as department store. In 1962, the Dayton Companyopened its first Target discount storeTarget founded. In 1970-2000, Target experience turnaround and nationwide expansion periods and in 2000, Target discount stores transfer to Target Corporation as discount store focuses on USA discount retail market. In 2011, Target Cor. expanded into Canada to launch its new stores.
Target Corporation is the 2nd largest of discount retailer at US market and totally owns 1763 stores in 6 branches. Target Corporation is the 2nd largest of discount retailer at US market and totally owns 1763 stores in 3 branches. 3 branches of Target stores: Target, Super Target, City Target. Target store is a chain of discount store and when it adds Pfresh concept (perishable and frozen foods, meat, and dairy), it was developed into general merchandise stores.In 1990, Target had one branch “ Target Greatland which was the former of Super Target. Super Target is a chain of hypermarkets (superstore combining a supermarket and a department store).City Target stores is the latest branches, started from 2011 and uses urban store concept to open the stores.In 2009, Target start to add Pfresh concept into Target store or Super Target. For Target Clinic, it only provides this service in Florida, Illinois, Maryland and Minnesota, these four states.
As I mention that Target is the 2nd largest discounted department store, it really cares about market player. In addition, it also focus on financial performance, brand recognition, community giving and service performance, these criteria. Market player: (2nd place of discount retailer in US)Brand recognition: (97% of American consumers can recognize the Target Bullseye logo.)Community giving: Target Corporation is consistently ranked as one of the most philanthropic companies. Financial Performance: comparable-store salesService Performance: guest perceptions of questionnaire
According to Target annual report from 2002 to 2011, its total revenue keep increases. In 2011, Target opened 21 more stores and increase 2475M revenues.
However, if you compare the total net income from 2002 to 2011, you may find another story. It is more fluctuated. In 2008, because of a series of economy crisis at second half year, Target face unprecedented economic challenge. However, it overcome it very soon; because it add Pfresh concept with Target store and Super Target. In 2010, it still grew up but in 2011, because it launches stores at Canada, its net income only increase 0.9B.In millions?
In 2008, Target change the method of production classification so its products categories became into 5 categories: Household, Hardlines, Apparel and accessories, Food and pet supplies, and home furnishings and décor. In household category, Target has pharmacy, beauty, and personal care products. In hadlliess, Target provides toys, electronics such as video games hardware and software, movies, and sports goods. In apparel category, Target has apparel which targeted different segment such as women, men, boys, girls, and infants. For food category, Target provides dry grocery, dairy, frozen foods, and beverages these products to its customers. In home furnishings, Target has furniture, lighting, kitchenware etc . Target also provides financial service to its customers. Target creates Target debit card and credit cards to its customers.
Target also provides financial service to its customers. Now Target focus on its REDcard. This card can be used as credit card and debit card. It has several features such as 5% with total purchase and provide free shipping service. It will donate 1% of the amount of total REDcard purchase to K-12 school of your choice. When you fill your prescription at Target store, you may get an extra 5% discount for one day of Target shopping, in addition to your existing 5%. It also didn’t charge you annual fee.
Clothing: Ross, Kohl’s, TJ MAXX, Marshall’s, online stores, Costco, used cloth stores e.g. Goodwill Pharmacy: CVS, Costco, Rite Aid, Walgreens, clinic pharmacy Toys: Toys&Rus, Disney store, Amazon, EBay, other online stores, Learning Express , U.S. Toy Co., Inc., Barnes & Noble Inc.Groceries: Costco, Ralphs, Albertson, Food 4 less ,Vons, Starter brosIn order to do a thorough internal and external analysis on target, we needed to look at their competitive space due to the fact that they offer such a wide range of products. After looking at the categories, we considered these 4 areas to be targets main revenue and the company’s main focus. We chose to look at these 4 categories in further detail for our analysis and these are targets competitors within these categories.
Lencioni
Hofstede
Cullen’s Model of Ethical Climate:
Catie sees herself staying here for a long time
NAICS (North American Industry Classification System)
Target is an analyzer. It is relatively stable and efficient in its general merchandising department. But it closely watched its competitors. When Wal-mart entered the grocery market, it rapidly followed up. It is currently experiment on small factor stores.Chi Can we combine this slide to previous one? Just mention Target is analyzer because I don’t think this point is really important to show in the presentation.
Discount retail is a slow grow industry. The demand for the products it sells, including apparels, groceries, toys and etc., is relatively stable. Although Target’s market share is relatively low comparing with the industry leader Walmart, its brand recognition is strong. The absolute number of Target’s sales is huge as well. Both factors will ensure Target to generate enough cash flow. So it is better to categorize Target as a “Cow” company instead of “Dog” company.ChiCan you adjust the circle size based on Target market share?? If market share is big, you use relatively bigger circle. If small, use smaller circle (For all BCG Matrix slides)
Toy industry is expected to shrink with an annual rate of 2.7% in next few years.Target is in the top 3 toy retailers and grabs about 17% market share in 2011. The industry is declining but Target is in a leading position in this segment. Target can be categorized as a “cow” company in the industry.
Apparel In 2009, the apparel retail industry in the United States had revenue totaling $160 B, 3% growth rate has been achieved from 2005 to 2009. 2009-2014 the estimated growth rate is 2%. Target’s sales of apparel in 2009 is 6.7B, representing a 4% market share. This is a mature industry. Although Target’s market share in the industry is not dominant but the market is pretty fragmented. So it can be categorized as a “cow” company.
GroceryThe U.S. grocery store industryis extremely competitive.Wal-Mart leads in grocery retailing, with 24% value share in 2011. Following Wal-Mart, the second and third leading grocery retailers in the US are Kroger and Safeway with 7% and 4% value shares, respectively. Grocery retailing is a mature, saturated market in the US.The need for food is ubiquitous, so the channel will continue to grow over the forecast period,. Walmart and Target, are a recent evolution in the supermarket vein. Target’s grocery sales in 2011 is 13.27B, representing a 1.6% market share. Based on industry characters and its market share, Target should be categarized as a “dog” company in this industry.
PharmacyUS pharmaceutical sales reached 307B in 2010 and is expected to grow with a rate of 6.4% in the next 5 years. The dominant players in the pharmaceutical retail industry are Walgreen and CVS. The industry is fast growing but Target’s share in this market is small. If Target can not win the market share, it will become a Dog when the market growth decline. Target should be categorized as a “question mark” company currently.
Overall, Threat of new entrants for target is High since New entrants are required only Capital to open the store, and they must achieve a substantial market share to realize economies of scale in order to set price lower but have profit. Otherwise they maybe at a significant cost disadvantageHowever, for pharmacy category, stores are required to have permit to carry drugs, therefore the threat of new entrants is moderate.Makes Rivalry high
Bargaining power of suppliers vary depends on the categories.Apparel and Toy are moderate because Target carry brands. For Apparel, The introduction of brand cloth Mossimo was a big success. And Target needs kind of these brand to maintain its reputation as “Stylish” , However, at the same time. there are many alternatives brands which Target can choose from. Therefore those categories have moderate power.Pharmacy are high because on top of the fact that Target carry popular brands, Pharmaceutical manufacturer industry is concentrated due to pharmaceutical manufacturer industry’s high barrier to entry. Therefore, competition in the industry is not high, which allow them to have more power over buyers, such as Target. Groceries are low. Many Alternatives, commodityDoesn’t increase Rivalry
Apparel: High Possible substitutes: is the high end clothes or any cloth which doesn’t fit the category of new, moderate brand perception, moderately low price. Such as Macy’s, bloomingdales, Loehmann's,JCpenny’s, nordstrom, saks fifth avenue, H&M, Forever21,used cloth stores e.g. Goodwill, online stores that directly from manufacturer or designersPharmacy: LowLittle to non substituteToy: highSubstitute: High-Possible substitutes: Anything that takes kid’s interest away from toys. Such as Music instrument e.g guitar center, reading, sports, video game For example, Nowadays, kids prefer to play Video game, such as Play station, Wii, Xbox. As technology advanced, there might be a chance that electronic devices completely take over the needs for toys. Please take a look at this graph. Next slidesGroceries:Possible substitutes are the Online delivery service, restaurants, especially fast food restaurants.Nowadays people become more and more busy. For those who doesn’t have time to go shopping groceries, online grocery stores which offer door to door service will be attractive. However, due to the price of the service, this is not competitive in the grocery store industry. Also the restaurants, especially fast food restaurants are the big substitute for the Groceries. People start to go to restaurants instead of buying food at grocery stores and cook themselves.Can we find chart of trend of population change for fast food restaurantsIncrease Rivalry
Since 2009, the population growth of kids ages 2-17 increased 1.54 percent in the U.S., while the gaming population of that age group has grown 12.68 percent. This growth in kids’ gaming population is far outpacing the growth experienced by the population of 2-17 year olds in the country. the fastest growth has been among kids ages 2-5, with an increase of 17 points in gaming incidence when compared to 2009.
For all category: High Although Target offers more designer brands at cheap price, other many discount storesoffer similar products. Therefore customer can choose other stores’ clothes without any switching cost. Increase Rivalry
Therefore rivalry is high-all the factors indicates that the industry that Target operates in is highly competitive-Many competitors in the market-market growth in this Industry is stagnantThus, price competition in this industry is high, Therefore nonprice competition can threaten industry profit
For Target trend analysis, we found target’s both revenue and net profit increased in the past 5 years. However, its gross profit margin continually drop. This may shows Target is taking lots of price pressures from its competitors, like wal-mart, amazon.Titled product life cycle?
When we saw discount department store industry, which target belong to, fierce competition is continuing. In order to maintain growth and increase market share, target executed differentiation strategy to drive profitability. Titled product life cycle?Time frame
Draw leapfrog lines
Macroeconomic condition in U.S. GDPConsumer confidenceCPIIncomeOthers: online retail sale growth, population growth, birth rate
What other factors should they be scanning for? Firstly, we look at macroeconomic condition in U.S. From a survey of top economics bloggers conducted in Jan. 2012, the frequently words they used to assess US economy are uncertain, fragile, growing.
Now, we saw U.S. GDP has a positive percentage change, which is good.
From this chart, we saw customer confidence has a positive correlation with retail sales.
And until 2012, customer confidence has an upward tendency, which could positively affect Target’s sale.
Blue line represents consumer price for adjusted inflation. Consumer price of food and beverage for adjusted inflation is slightly increasing in the past ten years
Consumer price of Apparel for adjusted inflation is slightly decreasing in the past ten years
In millions
Vertical integration: Cell phone service and IT project, food distribution
Wal-mart beats target in online customer satisfation – recently created own platformExpand business globally – as seen in trend of walmarts international sales, doing well – foundation in north americca – Vertical integration: : Cell phone service and IT project, food distribution