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MIT Sloan Rotman Design Challenge: Target Retail Strategy

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The future of retail strategic recommendations for Target with team design f(x). Won 3rd place in the International Rotman Design Challenge.

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MIT Sloan Rotman Design Challenge: Target Retail Strategy

  1. 1. ROTMAN DESIGN CHALLENGE
  2. 2. SEEING & TOUCHING PRODUCTS IS HERE TO STAY “I come in needing one specific item, then I end up shopping for more.”! 55% 30% In Store Online Shopping Preference The Converged Lifestyle, KPMG
  3. 3. RELEVANCE AND ACCESS DRIVE PURCHASE DECISIONS “I live in the area and love seeing if there are any good deals while I am walking by.” ! 33% 18% 2013 2012 Preference for Local PWC Retail Trends Report
  4. 4. SHOPPING SHOULD BE BOTH FUN AND PRODUCTIVE “I go to Target because I enjoy it while I get stuff done.” ! 65% 65% 50% 50% Lifestyle Lifestyle Everyday Everyday Planned Purchases Connected Consumer, Oracle Retail Connected Consumer, Oracle Retail
  5. 5. Problem Framing Field & Desk Research Concept Testing & Finalization Synthesis & Ideation
  6. 6. Moms Millenials Outliers Problem Framing Explore three customer groups Current core customers Future core customers Shoppers outside the norm
  7. 7. Field & Desk Research Target in-store intercepts Retail observations
  8. 8. Synthesis & Ideation In-depth interviews Locavore Target haterTarget lover Digital shopper Teen shopper New mom Mother of six In-store shopper
  9. 9. Synthesized research insights Generated dozens of ideas Clustered similar concepts Synthesis & Ideation
  10. 10. Concept Testing & Finalization Brainstorming a mock-up Market-testing the idea Rendering the concept
  11. 11. Target has an opportunity to lead a retail disruption Make It Fun Get Urban Be Seamless Design Principles Seeing & touching products is here to stay Relevance and access drive purchase decisions Shopping should be both fun and productive
  12. 12. What is it? Here comes the neighborhood Urban customers trust Target for everyday items and lifestyle products, but big box stores don’t make sense for their lifestyle or their location Get Urban
  13. 13. What did we hear? “It’s hard to find sheets in Brooklyn.” “I used to go in high school. It’s too far away now.” “I’ll stop in and shop for clothes and home stuff.”
  14. 14. Bright! by Target! Get affordable, design-focused lifestyle goods in smaller (20-40k sq. ft.) urban stores Stop in and pick up something for your apartment, the party you’re off to, or for your weekend away Get Urban
  15. 15. Target at Your Convenience! Get the Target brands you love and trust right near where you live and work Target now distributes affordable, high-quality everyday items through local, small-scale convenience stores Get Urban
  16. 16. What to test first? Consumer Desirability! Run focus groups and pop-ups of new concepts Financial Viability! Test product mix based on margins/desirability Project volumes by location Technical Feasibility! Build upon Target Express pilot Assess supply chain delivery Get Urban
  17. 17. What’s the impact? Rev/Sq. Ft.: $600 2x Target’s $300 – between Urban Outfitters and CVS Size: 30,000 Sq. Ft. About half the size of a City Target Total Rev per Store: $18.0 million 4-Wall EBITDA: 20% 10% Target Corp adjusted up for corporate G&A, etc. Earnings per Store: $3.6 million Leading lifestyle retailer for urban dwellers! 4-6 Bright by Target stores in every major " US metro area ! Up & Up is the ubiquitously available brand for affordable everyday items ! Significant penetration across local networks of stores in key markets Bright by Target: Store economics Get Urban Future Experience! Financial Considerations!
  18. 18. What is it? More fun at the all-in-one Large stores serve an important need for Target’s core demographic. But customers increasingly expect a more engaging shopping experience Make It Fun
  19. 19. What did we hear? “Local producers are awesome. I don’t want the same thing as everyone.” “It’s hard to pick when there are so many brands. I worry about being cheated.” “Big purchases are an investment. I want reviews and expert opinions.”
  20. 20. The Local Hub! Made Local, Made In America (or Canada). Spend your morning at Target checking out interesting local products that fit your lifestyle Target now offers new product lines incubated through the Target Saturday Marketplace Make It Fun
  21. 21. Up the in-store & bring in the online! Check out that new product you’re considering in our Product Petting Zoos Search and sort features and reviews right in the store Out of stock? Scan the tag and get it shipped for free Make It Fun
  22. 22. What to test first? Consumer Desirability! Pilot Target Saturday Marketplace in high-density suburbs Financial Viability! Assess Target Saturday Marketplace visitor volume Gather data from local merchants Technical Feasibility! Pilot successful Target Saturday Marketplace merchandise in regional stores Make It Fun
  23. 23. What’s the impact? Target as a creative hub for communities! Saturday Marketplace and local product sections at every suburban store, with local business growth spurred by incubation from the Saturday Marketplace. ! Leading in-store experience retailer! Increased frequency of store visits and larger average basket size Make It Fun Future Experience! Financial Considerations! Saturday Marketplace! Logistics coordinator Reduction in parking capacity Increased number of vendors to manage ! In-Store Experience! Technology development Reduced floor space
  24. 24. What is it? Seamless Shopping Customers are diversifying the ways they shop. Target brings the in-store fun online by creating a seamless, delightful shopping experience that offers customers transparency, immediacy, and personalization Be Seamless
  25. 25. What did we hear? “The website used to tell me if certain items were available... it doesn't now.” "There's no free shipping on the Target website. " “Too many things are out of stock too often.”
  26. 26. Shop the world ! Take a photo of something you like and get suggestions for Target products that fit your style Target is redefining

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