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.
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
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
Capstone Analysis: Target
Target Chihiro Yamaguchi Kai-Jen Shih (David) Group 4 Diana Colgrove Yuxiao Li Linyu Chang/Users/dianacolgrove/Desktop/50.png
AgendaInternal Analysis History and Performance Culture/Ethics AnalysisIndustry AnalysisSWOT/Trend AnalysisRecommendations
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
History 1902 2000Dayton Dry Target Goods Corporation 1962 2011 Target Target Discount Canada & store City Target
Current Status2nd Largest Discount Department Store1,763 Stores3 BranchesExpanded Offerings: PFresh, Target Clinic
How Does Target Define Performance? Brand CommunityMarket Player Recognition Giving Service Financial Performance Performance
Financial Performance Total Revenue (Millions)7000060000500004000030000 Total Revenue2000010000 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Financial Performance Yearly Total Net Income35003000250020001500 Total Net Income1000500 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Product Categories Household • Pharmacy, beauty, personal care • Toys, electronics, music, movies, books, sporting Hardlines goods Apparel and • Apparel for women, men, boys, girls AccessoriesFood and Pet Supplies • Dry grocery, dairy, frozen food, beveragesHome Furnishings • Furniture, lighting, kitchenware, small and Décor appliances, home decor, bed and bath
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
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
MissionMission 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
ValuesCore 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”
Organizational StructureDistribution 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 1Structure transfers to all areas
Organizational CultureProcess-Oriented Concern with getting things done with integrityEmployee-Oriented Deeply concerned with the wellbeing of employeesProfessional Embrace diversity in the hiring processOpen System Welcoming to new employees, orientation persistenceLoose/Tight Control Improvisation welcomed, yet training programs enforcedPragmatic Orientation Driven by the market, desire to meet guests’ needs
Fulfilling Target’s ValuesCustomer SatisfactionAction Plans: Message + TrainingOrientation OverviewsModeled Top-DownWorking on a TeamNo Guesswork InvolvedGuest Service Departments
DiversityTo 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
Artifacts• Symbols• Language Customers = Guests Employees = Team Members• Heros• Rituals
Ethical ClimateEthical Criteria: Benevolence • Team Interest • Social Responsibility
Wellbeing Pillars Individual Community Social Financial Safety Outreach Celebrations TuitionHealthy Living Service Recognition Reimbursement Exercise Events Financial Planning
Sustainability/Social Responsibility• Volunteer Events• Community Giving/Support Commitment to Education 5% of Income Given Back• “Here For Good”
Here For Good • Sustainable Living • Energy Smart • Smart Development • Green roofs, Urban Stores • Sustainable Products • Traceable seafood, Packaging • Efficient Operations • LED lights, motion centers
Market Positioning AnalysisIndustry Classification = Discount Department Store
Market Share Discount Department Store Market Share, 2010 DollarGeneral 2010 Sales (in billions) 3% Others Walmart 258Kmart 14% 3% Target 67 Costco Walmart Costco 60 12% 54% Kmart 16 Target 14% Dollar General 13 Others 66
Prospector, Analyzer, or Defender?Target = Analyzer Stable, routine, and efficient in its product market domains Closely watches competitors and rapidly adopts promising new ideas
BCG MatrixDiscount Department Store Industry Slow growth industry Relatively high market share High sales
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
BCG Matrix ApparelFor 2009-2014, theestimated growth rate is 2%Target’s sales in 2009 were6.7B, representing a 4%market shareTarget’s market share in theindustry is notdominant, but the market isfragmented
BCG Matrix GroceryGrocery retailing is amature, saturatedmarket in the USTarget’s grocery salesin 2011 was13.27B, representinga 1.6% market share
BCG Matrix PharmacyThe US pharmaceuticalindustry is expected togrow at a rate of 6.4%in the next 5 yearsThe industry growingfast but Target’s sharein this market is small.
5 Forces Analysis Threat of New Entrants Apparel: High Pharmacy: Moderate Toys: High Grocery: High Bargaining Power Bargaining of Suppliers Power ofApparel: Moderate Customers Pharmacy: High Rivalry: High High Toys: Moderate Grocery: Low Threat of Substitutes Apparel: High Pharmacy: Low Toys: High Grocery: Moderate
Threat of New Entrants Threat of New Entrants Apparel: High Pharmacy: Moderate Toys: High Grocery: High CapitalMarket Share
Bargaining Power of SuppliersBargaining Power of Suppliers Apparel: Moderate Exclusive Brands Pharmacy: High Toys: Moderate Commodities Grocery: Low
Threat of SubstitutesDesigner/Used Clothing Music/Video Games Grocery Delivery Restaurants Threat of Substitutes Apparel: High Pharmacy: Low Toys: High Grocery: Moderate
Gaming Population Gaming Population vs. Actual Population (Ages 2-17) in the US in Millions 73 71 69 67 Gaming PopulationPopulation 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
Bargaining Power of Customers Variety of Discount Bargaining Power Stores is Large of Customers HighLow Switching Costs