City Target Case CompetitionWhy people love Target and the goal of City Target. People love Target because it‟s the “cheap and chic” one-stop shop. Target‟s valuablebrand is defined by its clean and modern store layouts, quality product lines and value-orientedpricing. The Target logo is a widely recognized symbol across the United States population. Thecompany‟s motto of, „Expect More, Pay Less.‟ encapsulates these efforts. This has reinforced itsvalue proposition to consumers, as it continues to introduce new styles at low prices thatcontinue to keep customers interested in the products that they carry. The culture of McMansions and big box retail is changing. The gentrification of majordowntowns and migration of the working class back into the city has shifted the needs of theAmerican consumer. Young professionals are no longer in a race to the suburbs. Instead, manyhave opted for the renovated warehouse lofts where space is a premium. In the wake of the worstrecession since the 1930‟s, Target stores have given customers a value option without having tosacrifice style.Why is City Target is a good idea? Over the last decade, the American population has begun to move back inside the citylimits. The apartment or loft is replacing the four bedroom, three bath house for many workingprofessionals. Price and style have a priority over the abundance of products offered for many ofthese customers. However, value is still important. This “value” goes beyond the sticker priceof an item. Like the abandoned warehouse that was transformed into a trendy apartmentcomplex, City Target can bring life to an empty, blighted downtown building. City Target canalso bring value to the community by providing a big-box type atmosphere in a location thatmakes it practical for the urban shopper. The time and effort spent driving to a suburban locationfor many household items does not outweigh the premium sticker price paid at the pharmacy ordowntown market locations currently serving urban areas. Rising energy costs have also made conservation and the reduction of a companysenvironmental footprint not only trendy but economical. Individuals and companies both feel theburden in the form of less discretionary income. The overhead from energy costs of big boxstores can only be absorbed for so long before the costs will eventually be passed along to thecustomer. As a company that still positions itself in the value-oriented market, efficient controlof overhead costs is vital to the value chain at Target. The political atmosphere also makes this asmart time to transfer into the smaller City Target format. As green energy practices are beingpromoted by governments at state and federal levels, Target corporation may be able to receivetax credits and subsidies to help retrofit the new locations. This is in addition to the long-termsavings of lower energy costs. City Target is all about efficiency because in terms of city life,time is money.How we are going to keep the Target experience in a City Target in terms of layout anddesign? Target focuses a great amount of attention and detail to the layout and feel of itsstores. We recommend that Target continue with this strategy while adding small customadditions tailored to each city‟s location. Target stores typically feature a racetrack floor planand they decorate the interior of their stores with white tiles and red accents. This consistency indesign has helped to reinforce and strengthen the Target brand in the minds of the American
customer. We are suggesting the following recommendations that will be applied to all CityTarget locations. The first recommendation would be to add smaller versions of the traditionalpush shopping carts. Multilevel City Target locations will require the installation of cartescalators so shopper can conveniently move throughout the store. In addition, we recommendchanging the traditional method of the checkout system similar to what Target is currentlyexperimenting with in its Minneapolis location. Rather than choosing your lane or cashier, CityTargets will funnel customers into one line. This “zigzag” queue will conserve limited floorspace and create locations for point of sale service stations. Having bins filled with impulse itemslike traditional one dollar value items as well as candy, gum, batteries and magazines, willimprove the guests overall experience and keep customers busy until they reach thecheckout. This design will consist of two rows of checkout stations lined up on the left and onthe right with hanging flat screens that alert guests when a register becomes available. At CityTarget, instead of having checkout stations for ten items or less, there will also be a separate rowof self-checkout stations. The counter space at all checkout stations will be less than half the sizeof a traditional register. This will help eliminate wasted floor space. We also recommendplaying the top 100 songs throughout City Target stores. Playing music inside City Target storeswill give it an urban feeling compared to a traditional Target. We believe that theserecommended changes will highlight Target‟s goal of continually improving their guests overallshopping experience.How we are going to keep the Target experience in a City Target in terms of products? Although the City Target‟s are geared towards urban residents, we believe that TargetCorporation should maintain the Target experience through their product offerings. Werecommend that Target carries their traditional Target brands as well as other popular namebrands desired by current customers but they should limit the products offered to only the top60% of products sold in suburban Target locations. This includes trusted brand name productscurrently sold in Target stores, as well as their exclusive private label brands such as Up & Up,Market Pantry, and Archer Farms. In order to effectively accommodate urban residents we recommend that the sameproducts be offered in smaller packages better suited for urban residents who have little or nostorage space. Residents who are living and shopping in downtown locations will most likely notbe driving to and from City Target locations. Therefore, product packages should be tailored toallow customers to easily carry their items home on the subway or a bus. Currently, TargetSuperstore locations carry a wide array of furniture and large household appliances, many ofwhich are too large for small downtown apartments. Target should only carry furniture andappliances that are suitable for the shoppers in urban areas; for example, bistro tables instead oflarge dining room tables. This reduction in product offerings will drastically reduce thesedepartments by 40% of a traditional Target location.How we are going to keep the Target experience in a City target in terms of productcategories offered? Studies have recently been conducted on the demographics of three major cities whereTarget Corporation plans on opening City Target locations (See Appendix). It is important forTarget to tailor the product categories offered at each City Target location to the communitiesand demographics of each location. According to each region‟s urban and regional developmentcenter, Chicago, Los Angeles, and Seattle‟s downtown areas have the fastest growing
populations out of any other city in the United States. Each of these downtown areas is home tothe largest population of individuals between the ages of 25 and 34 years old. They are alsohome to the most concentrated area of highly educated singles. In the Chicago Loop there areover 65,000 students, thus product categories should be focused towards a college studentlifestyle. Based on our research, we have also found that typically less than 10% of the populationin fast growing urban locations consists of children under the age of eighteen years old. Becauseof these finding we recommend that the City Target stores offer a limited selection of children‟stoys, clothing and shoes to fit the demographics and needs of urban residents. These departmentswill be reduced to 10% of their traditional suburban Target store size. The goal of City Target isto be a one-stop shopping location for residents of urban areas and to give them a big box storefeel in a smaller and convenient location. We recommend that City Target concentrate productofferings to everyday essentials, pharmacy services, home office supplies, and women and men‟sapparel, reducing these departments to 70% of their current suburban store size. City Targetsshould also expand its line of business professional clothing in their City Target stores to suit theneeds of business executives and young professionals. We also suggest that City Targets offer basic household essentials while at the same timelimiting the amount of decorative accessories and appliances as well as smaller apartment-stylefurniture suitable for urban living. We also recommend offering an electronics section in CityTarget locations with a limited large-scale electronic product section.The grocery section of CityTarget locations will also be an important aspect for bringing urban residents into the City Targetlocations. The grocery section will offer packaged and frozen foods as well as fresh foods suchas, dairy, produce, and pre-packaged meats. One of the current draws to Target locations is alsotheir seasonal department. Therefore, we recommend that City Target continue to offer seasonaland holiday shopping items and decor in their urban locations.How we are going to keep the Target experience in a City target in terms of supplying CityTarget stores? Since City Target stores will be operating with an estimated 40%-60% less floor spacethan a traditional Target store, inventory will be an important and difficult challenge for TargetCorporation to control. Controlling this may include reevaluating the role and floor plans oftraditional Targets in relation to City Targets in order to create new synergies within City Targetlocations. Since City Target stores will be working with limited space and serving the urbancustomer, it will not be practical to carry many of the big items offered by traditional Targetstores. Target should begin to look at using suburban locations as secondary suppliers for thenew urban locations. Household, health and beauty, and food items will represent the greatestchallenge in terms of inventory control. The first two departments that we suggest drasticallyreducing or eliminating from City Target locations will be the sporting goods and children‟s toysand childrens apparel. We do not view sporting good items such as golf balls and exerciseequipment as high volume or traffic driving items for City Target stores. Also, the urbanlifestyle does not lend itself to these types of items since golf courses tend to be located in urbanareas and limited residential space limits the use of home exercise equipment. The children‟s toyand children‟s apparel department should be greatly reduced because of the limited number ofchildren under the age of eighteen living in these urban locations.
How we are going to keep the Target experience in a City Target in terms of tailoring it tothe city it is located in? We recommend having specialty stores such as Apple in City Target locations. This willattract more shoppers and increase traffic in City Target stores. Additionally, we recommend thatCity Target continue to provide customers the opportunity to enjoy Starbucks by including abistro-style location inside of the City Target stores. We also recommend incorporating a fastand fresh restaurant franchise inside City Target locations to attract more customers andemphasize City Target‟s sustainable building recommendations. The stores would provideoutside patio seating for the restaurants customers who would like to separate themselves fromthe retail portion of the City Target location. Not all City Target locations will have the samespecialty stores but stores incorporated in each City Target location will be determined theproximity to similar store offerings. Typically in metropolitan cities there is limited parking available. If the building allows,we recommend offering parking underneath City Target locations. This will provide a greatconvenience to City Target customers who decide to drive to City Target locations. Inpartnership with Apple, City Target should play iTunes music throughout their locations toprovide urban customers with a full urban shopping experience. Playing different types of musicin different parts of the store will appeal to specific groups of customers and enhance CityTarget‟s overall value. City Target should continue its efforts to carry fresh food and groceries,which is an essential part of its PFresh produce department format. Target Corporation shouldalso ensure that they incorporate the Target pharmacy into their City Target locations. TheTarget pharmacy provides additional value and convenience to on-the-go urban residents whonow can consolidate multiple trips into one stop on their way to and from work.How we are going to keep the Target experience in a City Target in terms of marketing tourban residence? In order to reach as many of the urban residents that live in or visit the city, City Targetwill market through weekly ads in newspapers, on television, on subways and publictransportation, Facebook, and twitter. Currently, Target‟s Twitter, @Target has a following ofover 304,000 people and its Facebook page has over ten million likes. By differentiating CityTarget from traditional Target stores, @CityTarget can appeal directly to the customers that livein the city and surrounding downtown areas. Facebook updates and tweets can be sent outspecifically for special store events, weekend or clearance sales, or when new items are going tobe carried in the City Target location. We recommend using Facebook events to get the word outabout celebrity visits, book readings, city events, and special shopping days. This will appeal toyounger residents in the city and college students that live and attend college near downtownareas. Target is known for that classic red color and target logo; City Target will follow the samedesigns inside and outside of its stores. To maintain the downtown feel and architecture thatmany metro areas have, City Targets will be sure to maintain the historical architecture of thebuildings they decide to move into. To preserve that downtown feel City Target will drawattention to urban residents through red awnings over windows, Target logos in the windows,and street lamp banners surrounding the store. If possible, nearby newspaper dispensers andlampposts will be painted the traditional Target-red color.
How we are going to keep the Target experience in a City Target in terms of communityoutreach? We recommend that City Target focus on going green in an urban setting. City Targetshould promote reusable bags, recycling, its sustainable products offerings, its efficientoperations and green transportation practices. In the development of a new City Target store,City Target should minimize the use of new building materials and undeveloped land while atthe same time promoting to the community the added value City Target will bring to thelocation. City Target should also incorporate “green roofs” in all possible City Target locations.These roofs will filter air pollutants, absorb storm water and provide a habitat for birds. CityTarget should make it their goal to preserve any natural habitats around the city they decide toenter and work with the local community to enhance the natural beauty of the city. Moving bigbox stores like Target into downtown locations will lower the citys carbon footprint in the longrun, because consumers will be traveling a shorter distance overtime to get the essential productsthat they need.How we are going to keep the Target experience in a City Target in terms of differentiatingourselves from the competition? Target and City Target will continue to provide the same shopping experience thatcurrent Target customers have come to know and love. City Target, like traditional Target stores,will erase the concept of low-cost goods that many big box retailers are plagued with. Instead,City Target will provide trendy, fashion-forward, and chic merchandise at lower than expectedprices. Upscale merchandise can be sold at prices just as low as competitors. With award-winning designers, celebrity chef partnerships for food and kitchen essentials, and an array ofmerchandise available to meet the needs of urban customers, City Target will prove to be thefirst choice for customers. Catering directly to customers that live in downtown city areas, CityTarget will be the convenient one-stop shopping experience where shoppers can still expect moreand pay less.How we are going to keep the Target experience in a City Target in terms of expanding inthe future? In the future, we recommend that City Target begin its expansion into the followingcities: Phoenix, Dallas, Houston, Atlanta, Miami and New York. These are booming cities withinthe U.S. and are expected to have a population of over ten million by the year 2040, according tothe Metropolitan Institute at Virginia Tech. These locations will provide City Target with anenormous customer base and will allow Target to quickly increase their brand awareness amongurban customers. Moving into these areas now will allow Target to ensure that it has an ideallocation in anticipation of the cities future expansion. Future locations within these cities shouldkeep in mind the proximity to public transportation, to make shopping at a City Target locationas convenient as possible. Target Corporation will continue to remain steadfast in its mission ofproviding great value to customers, supporting the community, fostering diversity andenvironmental protection efforts, which has ultimately allowed the company to become what it istoday.
AppendixTarget’s Current SWOTStrengths Well-known Target brand name A vast array of high quality products Unique private label brands only carried in Target stores Use of mobile and web apps adding a growing convenience to shoppers Ability to stay up-to-date in terms of design Exclusive product offerings Convenient locations across the United States One stop shopping experience Ability to positively differentiate their brand name from the competition Current market position Strong community outreach programs Strong distribution channelsWeaknesses Higher cost products compared to the competition Availability of locations for future expansion Low corporate brand awareness compared to the competitionOpportunities International expansion Acquisitions Broadening product lines Decreasing product costs Increase brand awareness Increase market share Selling private label brands outside of Target storesThreats Limited global presence Health of the U.S. economy Natural disaster Inability to differentiate the Target brand name from the competition Strong competition in the market
City Target SWOTStrengths Located in highly populated areas Strong brand recognition Efficient layout and design Low cost retailer Convenient one-stop shop Private label brands Dedication to community outreach programsWeaknesses High cost retail space Smaller store square footage to store and showcase merchandise Limited product offerings because of size Higher distribution costs Limited inventory storageExternal Opportunities Working with local businesses Expand brand recognition International expansion Expanding product offerings designed specifically for urban guests Alliances and partnerships with other popular brand names and bringing them into the City Target stores Expansion into other large U.S. citiesExternal Threats Other big box stores moving into large cities Quickly changing consumer preferences Competitor expansion of product lines Unforeseen city regulation or taxes Expansion of internet retail
DemographicsCity Population Population growth Median Largest age 4 years of Average household Singles Have since 2000 Age group College income childrenChicago 20,280 66% 32 24-35 30% $67,720 43% >7%Seattle 60,000 20% 32 24-35 45% $56,000 70% >10%LA 45,518 NA 33 24-35 80% $86,300 45% >10% Works CitedEl Nasser, Haya. "Population Boom Spawns Super Cities." USA Today. Gannett, 10 July 2005.Web. 31 Mar. 2012. <http://www.usatoday.com/news/nation/2005-07-10-megacities_x.htm>."2011 Downtown Seattle Demographics Report." Downtown Seattle Association. Web. 24 Mar. 2012. <http://downtownseattle.com/files/file/Demographics2011_WEB.pdf>."CityTarget: What You Can Expect From the Urban Format of 2012." InStore Trends. Retailnet Group. Web. 24 Mar.. 2012. <http://instoretrends.com/index.php/2011/12/02/citytarget- what-you-can-expect-from-the-urban-format-of-2012/>."Downtown Los Angeles Demographics Study." Downtown LA.com. Downtown LA Center Business Improvements District. Web. 23 Mar. 2012. <http://www.downtownla.com/survey-2011-results.asp>."Downtown Seattle Demographics." Downtown Seattle Association. Web. 24 Mar. 2012. <http://downtownseattle.com/pdf_files/resources/Demographics.pdf>."Loop Economic Study and Impact Report." Chicago Loop Alliance. Web. 24 Mar. 2012. <http://www.chicagoloopalliance.com/pdfs/2011_Loop_Economic_Study_FINAL.pdf>.