33. Why Statement
APPENDIX
Target’s Why
Value Creation Model
Awareness Process
Customers
Website Demo
Sample Ad
Non-Accredited
Suppliers
Method
Profit Breakdown
Return
Onboarding Cost
Risks & Mitigation
Other
Vendor Timeline
TARGET’S WHY | SUPPLIERS | CUSTOMERS | RETURN | Q&A
Travel & Meeting Cost
Mktg/Maintenance Cost
Cost Breakdown
Current Locations
Marketing Timeline
Cannibalization
Decision Matrix
Startup Incubator
Decision Matrix Criteria
34. APPENDIX CONT.
Supplier Diversity
Data
Suppliers
Acquisition
Acquisition Pro/Con
Tradeshows List
Suppliers
Tradeshows Pro/Con
Sticker Price
Breakdown
Return
Informational Tag
Breakdown
Objectives
Other
Golden Circle
Lightbulb Breakdown
Financial Analysis
Non-Monetary ROI
FreshPaper
Unweighted Matrix
How Explanation
Supplier Diversity
“Best Practices”
Vendor Decision
Matrix
Supplier Consultant
Startup Incubation
Process
Startup Incubation
Incentives
TARGET’S WHY | SUPPLIERS | CUSTOMERS | RETURN | Q&A
35. Risk Mitigation
• Upsetting current vendors
• Positioning
• Adding new customers
• Core beliefs/Why
• Vendors selling to others
• Build loyalty
• Sign priority contracts
• Rebrand
• Reinforced through online and in stores
• Diversifies targets image
TARGET’S WHY | SUPPLIERS | CUSTOMERS | RETURN | Q&A
36. Non-Accredited
• Discover
• Reach out to different chambers of commerce
• Chose Valid vendors
• Develop
• Utilize the start incubator
• Distribute
• Focus on region, type of store or random test store
TARGET’S WHY | SUPPLIERS | CUSTOMERS | RETURN | Q&A
37. Method
• Origins
• Small company started by two college grads
• was in 1 grocery store by 2001
• Big break
• They got sourced by target in late 2001 and entered 90 stores
• Were massive success and expanded into all target stores
• Why they stood out
• They were a niche product with important morals
• They did things other competitors wouldn’t think of
TARGET’S WHY | SUPPLIERS | CUSTOMERS | RETURN | Q&A
42. Onboarding New Employee Cost
Employees - Researchers/Buyers
Average Salary Per New Employee $60,000 $60,000 $60,000
Average Benefits Per New Employee $18,000 $18,000 $18,000
Average Training Cost Per New Employee $1,500 $1,500 $1,500 $1,500
Total New Cost Per Employee $1,500 $79,500 $79,500 $79,500
Number of Employees Hired 10 10 10 10
Total Cost For New Employees $15,000 $795,000 $795,000 $795,000 $2,400,000
Employees - Consultants
Average Salary Per New Employee $75,000 $75,000 $75,000
Average Benefits Per New Employee $22,500 $22,500 $22,500
Average Training Cost Per New Employee $1,500 $1,500 $1,500 $1,500
Total New Cost Per Employee $1,500 $99,000 $99,000 $99,000
Number of Employees Hired/Employed 10 10 10 10
Total Cost For New Employees $15,000 $990,000 $990,000 $990,000 $2,985,000
Employees - Website and Marketing
Average Annual Income $55,000 $55,000 $55,000
Average Employee Benefits $16,500 $16,500 $16,500
Average Training Cost $1,000 $1,000 $1,000
Cost Per Employee $72,500 $72,500 $72,500
Number of Employees 3 3 3
Total Staffing Costs 0 $217,500 $217,500 $217,500 $652,500
TARGET’S WHY | SUPPLIERS | CUSTOMERS | RETURN | Q&A
43. Travel and Meeting Cost Breakdown
Annual Meeting (Education)
Number of Suppliers 0 25 55 88
Number of Representatives Per Supplier 2 2 2 2
Total Representatives at Meeting 0 50 110 176
Airfare and Accommodations Costs Per Person $2,400 $2,400 $2,400 $2,400
Total Airfare/Accomodations for annual
meetings $0 $120,000 $264,000 $422,400 $806,400
New Employee Travel (Research and Consultant)
Incrimental Number of New Traveling
Employees 15 15 15 15
Number of Trips per Employee (Average) 1 3 3 3
Average Number of Trips 15 45 45 45
Travel and Accomodation Cost Per Trip $2,400 $2,400 $2,400 $2,400
Total Travel and Accomodation Cost
(Employees) $36,000 $108,000 $108,000 $108,000 $360,000
Other Meeting and Educational Costs
Food $0 $10,000 $22,000 $35,200
Materials $0 $5,000 $11,000 $17,600
Venue $10,000 $10,000 $10,000
Total Other Meeting and Educational Costs $25,000 $43,000 $62,800 $130,800
TARGET’S WHY | SUPPLIERS | CUSTOMERS | RETURN | Q&A
45. What is a Startup Incubator?
• Provides a platform to accelerate the successful development of
entrepreneurial companies
TARGET’S WHY | SUPPLIERS | CUSTOMERS | RETURN | Q&A
46. What is a Startup Incubator?
• Provides a platform to accelerate the successful development of
entrepreneurial companies
TARGET’S WHY | SUPPLIERS | CUSTOMERS | RETURN | Q&A
47. Decision Matrix Criteria Selection
• Core Values/Why
• Return on Investment
• Feasibility
• Sustainability
• Vender Relations
• Customer Satisfaction
• Price/Cost
• Product Quality
• Delivery
• Warranty and Claims
• Labor Relations
• Management and
Organization
• Conflict/Problem
Solving Capability
• Communication System
• Technical Capability
• Production Capability
• Packaging Capability
• Operational Controls
• Amount of Past
Business
• Reputation
• Industry Position
• Reciprocal
Arrangements
• Impression
• Business Attempt
• Maintainability
• Size
• After Sales Service
• Technical
Support/Expertise
• Attitude
• Total Service Quality
• Training Aids
• Performance History
• Financial Stability
• Location
TARGET’S WHY | SUPPLIERS | CUSTOMERS | RETURN | Q&A
48. List of Tradeshows
• Supplier Diversity Minority Business Entrepreneur Trade Show
• National Minority Supplier Diversity Council Conference and Business
Opportunity Exchange
• Supplier Diversity Business Conference
• Women Business Enterprise National Council Conference & Business Fair
• National Gay & Lesbian Chamber of Commerce National Business &
Leadership Conference
• Veterans In Business Conference
• National Veterans Small Business Engagement
TARGET’S WHY | SUPPLIERS | CUSTOMERS | RETURN | Q&A
49. Tradeshows
• Pros
• Tried and trued method of increasing diverse suppliers
• Easy access to large network and database of suppliers
• Cons
• More competition among buyers to secure high-value diverse vendors
• Higher expenses to attend conferences and tradeshows
• Not directly related to our core values and Why campaign
TARGET’S WHY | SUPPLIERS | CUSTOMERS | RETURN | Q&A
50. Overall Approach: Best Practices to
Increase Supplier Diversity
• Have Top-Down Commitment
• Set Metrics to Ensure Accountability
• Integrate Supplier Diversity Throughout the Organization
• Invest in Diverse Supplier Education & Training
• Share In-House Expertise With Diverse Suppliers
• Protect Your Investment, Provide Financial Support
• Tap Diverse Suppliers for Solutions
• Consider Diverse Supplier Consortiums
• Partner With Regional or Industry-Focused Groups
TARGET’S WHY | SUPPLIERS | CUSTOMERS | RETURN | Q&A
53. Target Supplier Diversity Data
2014
• Diverse Suppliers - 762
• New Diverse Suppliers - 160
• First-Tier Spending with Diverse Suppliers - $965,527,141
• Second-Tier Spending with Diverse Suppliers - $557,091,949
• Spending with Diverse Suppliers - 26.21% decrease over 2013*
• Diversity Spending 2008-2013 Compound Annual Growth Rate - 0%
2013
• Diverse Suppliers - 786
• New Diverse Suppliers - 76
• First-Tier Spending with Diverse Suppliers - $1,300,000,000
• Second-Tier Spending with Diverse Suppliers - $495,000,000
• Spending with Diverse Suppliers - 31% increase over 2012
• Diversity Spending 2008-2013 Compound Annual Growth Rate - 7%
TARGET’S WHY | SUPPLIERS | CUSTOMERS | RETURN | Q&A
54. Target Supplier Diversity Data
2014
• Diverse Suppliers - 762
• New Diverse Suppliers - 160
• First-Tier Spending with Diverse Suppliers - $965,527,141
• Second-Tier Spending with Diverse Suppliers - $557,091,949
• Spending with Diverse Suppliers - 26.21% decrease over 2013*
• Diversity Spending 2008-2013 Compound Annual Growth Rate - 0%
TARGET’S WHY | SUPPLIERS | CUSTOMERS | RETURN | Q&A
55. Acquisition
From 2014 Corporate Responsibility Report:
• Spending with Diverse Suppliers - 26.21% decrease over 2013*
TARGET’S WHY | SUPPLIERS | CUSTOMERS | RETURN | Q&A
56. Sticker Price Further Breakdown:
Marketing
Sticker Price Breakdown Assumptions:
Diversity Suppliers revenue allocated based on sq ft
sticker price wholesale of $.002/sticker
Revenue trends follow overall store
Current EOY 2016 EOY 2017 EOY 2018
Total Square Feet Allocated to
Diversity Suppliers 2369668.246 2613744.076 2906398.104 3199052.133
Revenue per Square Feet 300 300 300 300
Total Revenue Allocated to
Diversity Suppliers 710900473.9 784123222.7 871919431.3 959715639.8
Average cost per Item Sold by
Diversity Suppliers (Low end) 10 10 10 10
Total Items Sold by Diversity
Suppliers (High End) 71090047.39 78412322.27 87191943.13 95971563.98
Cost per Sticker 0.002 0.002 0.002 0.002
Total Sticker Cost 142180.0948 156824.6445 174383.8863 191943.128
TARGET’S WHY | SUPPLIERS | CUSTOMERS | RETURN | Q&A
57. Informational Tag Further Breakdown -
Marketing
Informational Tag Breakdown Assumptions:
Financial Calculations for tags
are previously known and paid
for.
Each tag costs $0.001
Allocation of items sold based
on Square Feet
Current EOY 2016 EOY 2017 EOY 2018
Total Items Sold by Diverse
Suppliers (High End) 71090047.39 78412322.27 87191943.13 95971563.98
Total Cost Per Tag 0.001 0.001 0.001 0.001
Total Cost of Tags 71090.04739 78412.32227 87191.94313 95971.56398
TARGET’S WHY | SUPPLIERS | CUSTOMERS | RETURN | Q&A
58. Light Bulb Cost Further Breakdown –
Marketing
Light Bulb Cost Breakdown Assumptions:
EOY 2018( 34 months)
Linear Growth of store placements
75 cents per bulb
Total Revenue Per Square
Feet 300 Bulbs last entire life of project
Gross Margin Percent 0.7061335
Average COGS per Square
Foot 211
Current EOY 2016 EOY 2017 EOY 2018
Diversity Supplier COGS 500000000 551500000 613250000 675000000
Average COGS/Sq ft 211 211 211 211
Total Sq ft Allocated to Diversity
Suppliers 2,369,668 2,613,744 2,906,398 3,199,052
Total Square Feet Per Light bulb 5 5 5 5
Total Bulbs Needed 473933.6493 522748.8152 581,280 639810.4265
Incrimental Bulbs Needed 473933.6493 48815.16588 58,531 58,531
Price Per Bulb 0.75 0.75 0.75 0.75
Total Bulb Price 355450.237 36611.37441 43898.10427 43898.10427
TARGET’S WHY | SUPPLIERS | CUSTOMERS | RETURN | Q&A
59. Cannibalization
• Affect existing sales
• Will have a minor effect on sales
• Target buys $12,440 million work of goods
• We are sourcing just 500 million
• Will increase over sales
• Increase customer loyalty
• Identifies the spesfic needs of certain customers
• Increases customer equity
TARGET’S WHY | SUPPLIERS | CUSTOMERS | RETURN | Q&A
60. Acquisition
• Pros
• More control over vendors and outputs
• Strengthens top-down method
• Cons
• Larger fixed expense
• Does not grow diversity efforts
• Has failed in the past
TARGET’S WHY | SUPPLIERS | CUSTOMERS | RETURN | Q&A
61. Marketing Timeline
• Year 1
• Focus: Test Market
• Implement in store campaign in 90 stores
• Website Launch
• Year 2
• Focus: Nationwide Expansion
• Stickers Campaign
• Year 3
• Focus: Adjust/Maintain Current Plan
• Further education and awareness
TARGET’S WHY | SUPPLIERS | CUSTOMERS | RETURN | Q&A
