target is the US largest retailer store.this case present that how target got success in very low time and how its compete its best rival WALMART,what strategies it adopted to got success and made lots of revenues.
Group members no.1 Minal muzammalMalik umair Sumairamahmood munsif Asma shafiq
Wall mart time line 1960___ 1962 1972 _ 1980s 21st century_______Birth of discount retailing Sam WaltonResearch on discount retailing Wal-Mart begins put 95% money In “Roger Ark.” Wal-Mart goes public 15 Wall-Mar stores 267 stores in 11 states Wal-Mart comes of age warehouse store in 1983 complete grocery store 36 department of general merchandise 1402 wall mart stores 123 Sams club location one of the most successful retailers in the world today 9884 stores location in 28 countries Employs 2.1 millions Serving more than 176 million customers per year
• All about “low prices”• “Cheap chic” name by customers• WALL MART >target• Began to lag in 2000• Experience with luxury brands• “Always low price always”• “Save money live better”• Familiar price “rollbacks”• In 2008, defying economic slowdown• Increase in sales ------5%
Target time line 1960__ 1962_ 1972 1980 21th century __ Founding of Target in 1962DaytonsDayton dry good company Turnaroundfamily store chain 1975 companys top revenue producerworld largest discount store 151 units and $2.05 billion in sales Nationwide expansion 912 units in 44 states , sales reaching $26.0 billion E- commerce Target Corporation 1000 stores in 47 states decline in 2008 closing 262 garden centers
• All about “style & fashion”• Chipped away from massive shares• Target grew much better than wall mart• Unabashedly attempted to become more like target• Slight dip in store traffic in mid , 2008
CEO address to investor:• Consumer held perception that target’s not as strong as of it biggest rival.• Investor should be patient, its value message would take time to resonate with consumer.• Wal-Mart had a decades-long lead building, cost structure , competitive advantage.
• Ackman, founder, Pershing Square Capital Management• Ackmans investment $2billion in 2007.• Targets third largest shareholder• companys own share price is down 41% from its July 2007 high• while rival Wal-Mart is up 3%.
William letter• "The deficit of experience on Targets board has contributed to the companys underperformance,“• claims that the companys directors lack expertise in retailing, credit cards, and real estate
• Steinhafal refused to give up on his strategy.• He intensified target “pay less” & “expect more”• Focused on advertisements.
1) Converting department stores into mini- grocery store carrying 90% of food categories.
2) Provide new package for its main store brand.3) Introduce new brand up & up which was replace with target bull’s-eye.
• Wal-Mart advertises that all their products & mention that are made in America, and they even use an American flag in their advertising. But if you check it out, thats not true.• In fact, they buy $15 billion dollars worth of goods from China every year.
Target‘s return policy:• Target customers with receipts can make an unlimited number of returns or exchanges within 90 days.• Products can’t be used, and must be in their original packaging
Return gift card• customers to make just two non-receipt returns of up to $35 each, over 12 months.• If you decide to exchange the returned item for something that costs less, Target will give you a gift card for the difference. But you’ll have to use it in the same department.
• Steinhafel characterized the current economic environment as “somewhat unstable” and “fragile.”• He predicted: “Theres going to be good months; theres going to be bad months.”• first quarter ended May 2, earnings rose 28.5% to $671 million,• sales increased 5%
• its higher profits private label lines – up & up,• Archer Farms and Market Pantry• which now account for more than 20 percent of all food products sold, up from 18 percent in 2007,• increased gross margins from 30.8 percent a year ago to 31.3 percent• another sign of improvement and effective expense controls
• company has "unique top-line drivers that arent dependent on a macro recovery• " such as Fresh, the roll out of fresh groceries at many of Target’s 1,743 stores.• Total assets was $43,705.• Profit increased 54%.• Spending per visitor increased.• Wal-Mart sales was slowing at that time showing sign of decline.
• All strategy will continue with few adjustment.• Target has increased same-store sales in the past year, including 1.6 percent growth in the third quarter.• Doug Scavenger said: “It’s fairly clear that Target’s customers are doing better than Wal-Mart’s because Wal-Mart has more of those lower- income customer. Neil curie recommends buying Target’s shares.
comparison Wall mart VS Target• Services: Staffer is equal in • Services: Target’s staff is much more professionalism to some Wal-Mart professional by leaps and bounds managers.• Price: little higher and sometimes • Prices: lower than wall-ma MUCH higher for example : Archer Farms • More speed:.• More Speed: slow in their actions than target 1.They actually move 2. They are generally friendlier than Wal-Mart. 3. THEY OPEN MORE LANES when it gets busy Employees: 3 times more employees Employees: has less Employees and then a Target., but Wal-Mart does not oddly enough everything works out offer a real health plan faster and better
• Wall mart is the US best discount retail store by times.• Wal-Marts revenue is 6times more than target.• when recession times start people try and expect to pay less and get lots of items• need of an ordinary person is capture by target• they try to adapt such strategy by which people pay less and expect more.• target roses its slogan of EXPECT MORE AND PAY LESS.• target CEO is so determined in his policy that he didn’t listen to his any investor and stay strict to his policy.• time comes when the dream of CEO has came true and target becomes the worlds best discount retail store of USA.
What micro environmental factors have affected target’s performance over the past few years
One of the largest and successful retailers in the US is TargetThere have been many micro environmental factors that have affected its performance over the past few years.The microenvironment factors close to the company that affect its ability to serve its customers such as the company , suppliers, marketing intermediaries, customers, competitors and publics .Target wanted to show itself as a discount retailer store but also it shows designers wears. Target isknown due to its style and fashionalable items which is slightly higher in price as compared to other stores. Many Target stores are build right across the street or in the same vicinity and manyconsumers compare the two and usually assume Wal-Mart is the cheapest and better to buy.The marketing concept states that, to be successful, a company must provide greater customer value and satisfaction than its competitors do . Media also affect its performance because it carry the news, feature and editorial opinion
What macro environmental factorshave affected Target’s performanceduring that period
There are lots of changes which affects the target performance and there changes are difficult to oppose. These changes are Demographic affects in such a way that as time passes the fashion and scenarios are changed .Economic Presently there is inflation, “too many people chases too few good” so its also a factor which affect performanceNatural Factor There are also some natural factors which effects a lot if GOD forbid earthquake or any other incident occur than might be possible the performance of company is affected. Political. If there is political instability than also company’s revenue may affect. Technological As technology got progress retail stores try to dramatize the market place so that customers got the reason to visit target.Cultural It also affect the market because people use to make shop, to be a part of or up-to-date of the culture or fashion.
By focusing on the “pay less” part of its slogan, has target pursued the best strategy? Why or why not
Target pursued the best strategy by focusing on PAY LESS.Because every competitor offers as less as they can but target adapt a new strategy and try to attract people by offer many thing in low price. they made two operational changes in which they mange a box with lots of thing and offer at low price about 30 % less to usual market.They even launch a new product with a name of UP AND UP and MINI GROCERY STORE
Why alternative strategy might target havefollowed in responding to the first signs ofdeclining revenues and profits
Target only focus on to facilities its customer by offer more in low priceinstead of only focusing on paying less.That alternative strategy is adapted to attract customers. EXPECT MORE AND PAY LESS
Given target’s current situation, whatrecommendations would you make toSteinhafel for his company future
the present situation of target is very good In 2003 to 2007 Profit. Wal-Mart 10.3% Target 16% In 2007 Wal-Mart 6% Target 20%Target have to work more keenly on payless but target still be retaining the EXPECTMORE part of its image .most customers who visited target are the age of 42 theyusually use coupons so to attract more customers they offer more discounts ..