Target Corporation is a reputable organization that deals in differentiated merchandise at discounted prices. Its products range from high-end luxury products to common everyday essentials. Their success factors for providing a choice shopping experience include fulfillment options, devotion to innovation, an efficient supply chain, advanced technology, and loyalty offers, among others.
Target corporation esteems discipline in its business management, a factor that has spurred its growth. The adoption of digital channels has made shopping easier for the corporation’s customers, particularly during this COVID period when there are restrictions on movement.
We take a look at Target Corporation’s competitive advantages through a SWOT analysis to understand the ‘how and why’ of the US retail giant.
Target – At a Glance
Name | Target Corporation |
Website | www.target.com |
Founders | George Dayton |
Chief Executive Officer (C.E.O.) | Brian Cornell (August 2014) |
Tagline | Expect More. Pay Less |
Headquarters | Minneapolis, Minnesota, United States |
Type of Corporation | Public |
Year Founded | 1902 |
Revenues (2021) | $106.01 Billion |
Key Products/Services | apparel and accessories, household goods, decor, food and pet supplies, electronics, and other items |
Key Competitors | Walmart, Home Depot, Amazon.com, Costco, The Gap, and Kroger, etc. |
Here is the high-level summary of the SWOT analysis of Target before jumping into the detailed analysis of the strengths, weaknesses, opportunities, and threats of the company.
Target Corporation’s Strengths
Wide range of products
Target corporation is a one-stop shop for all manner of products, including groceries, pharmacy products, accessories, designer clothes, home décor, sporting goods, etc. The corporation’s digital channels offer an equally wide range of merchandise with assorted complementary products.
Market positioning
The brand has positioned itself as the industry choice store for high-quality, trendy, fashionable products at discounted prices. Their target customer base comprises medium to high-income households that have a median income of $64k.
A rich customer experience
Target’s customer experience towers over others in the US retail industry. The company’s retail outlets have better floor plans, a clean store environment, well-lit and demarcated aisles as well as better shopping carts.
Market Presence
Target has a strong market presence with a total of over 1900 stores in all 50 states of the US and in Colombia. 75% of the US population can access a Target store within 10 miles radius. The corporation has a heavy market presence in California (287 stores), Texas (150 stores), and Florida (123 stores)
An efficient logistics and distribution system
To ensure that the corporation’s merchandise is at the right store at the right time, Target corporation collaborates with common carriers to ensure that the majority of its vast merchandise reaches its 40 distribution centers, stores, and ultimately the customers.
Effective management of inventory
The corporation makes use of a robust inventory management system and techniques to ensure minimum stock-outs, spoilage, and lost sales, among others. Their inventory management system makes use of techniques such as demand forecasting, seasonality, planning, and vendor management, among others.
Digitization of processes
Target’s ‘Cartwheel’ app is excellent in facilitating the shopping experience for the corporation’s digitally savvy customers. Such customers are able to place their orders online, check out their preferred products in different stores, check out prices, find desired items by aisle, check out on coupons/offers, scan their items, check out, and manage their credit cards, among other processes; of this is enabled by app seamlessly online.
Focus on designer apparel and accessories
Target has partnered with elite fashion designers to ensure they provide great designs, top quality, and variety for the maximum satisfaction of their customers. This has translated to greater revenues from this product segment, as approximately 20% of Target Corporation’s revenues come from this product segment.
Robust corporate social responsibility
Charitable works in the community are one of the core values of Target. 5% of its profits, which is approximated at $4 million each week, is channeled towards children’s education programs, disaster preparedness, food drives, and relief efforts, among others.
Partnerships and collaboration
Strategic partnership with different players in the industry has boosted Target’s efficiency and effectiveness. Its partnership with Starbucks, for instance, has ensured an increase in sales as Starbucks drives more traffic to Target’s outlets.
Target’s Weaknesses
Target is relatively expensive
When compared to Walmart, Target’s biggest competitor, Target charges 15% more on their groceries. This alone can drive price-sensitive customers to Walmart.
Business operational Risks
Due to the high amounts of data collected from customers, retailers are at high risk of data security breaches. Target, for instance, faced one of the worst incidents of the data breach, which was close to 70 million customers’ credit card information stolen. This negatively impacted their reputation as they had to face many lawsuits.
Minimal presence in the international markets
Target had attempted to expand into the international markets; unfortunately, those efforts were a big failure, and the corporation had to close its operations in Canada, where it had opened 133 stores.
Target’s Opportunities
Partnerships
Strategic partnerships avail rich strategic advantages, particularly for the retail industry, where competition is fierce. An example is Target’s strategic partnership with CVS, which acquired Target’s clinic and pharmacy business. This brings onboard expertise and enables Target’s customers to access industry-leading healthcare services in Target’s stores.
Loyalty program
Target’s REDcard loyalty program is a rich ground for data analytics that would give the corporation insights into customers changing needs. This will not only enhance the continuous personalization of services but will spur greater satisfaction, loyalty to the brand, and growth.
Maximization of the online platforms
This will greatly complement online sales and accelerate growth in this area, just like Amazon and Walmart.
Private Label brands
Private-label brands enhance Target’s efforts for differentiation and have higher margins. By Target developing its own portfolio of private label brands, it will be able to increase its margins and as well differentiate itself in the market.
Innovation
With the increase in technological advancements, the brand has innumerable opportunities to leverage technology for more efficiencies and effectiveness for overall profitability, customer satisfaction, and longevity in the market.
Target’s Threats
Fierce competition
The retail sector is characterized by fierce competition and low margins the world over. Its major competitors include Walmart, Home Depot, Costco, and Kroger, among others which have many of their stores strategically located in the populace. This greatly cuts Target’s market share.
Low barrier to Entry
The retail business, although highly capital-intensive, is easily replicable. New entrants into the market can undercut the brand’s prices and inch into the brand’s market share.
Limited avenues for differentiation
The retail space has limited space for differentiation; this failure to differentiate may pose a threat to Target’s brand’s loyalty program as their customers shift to price-sensitive online shopping opportunities that have a minimal emotional attachment.
Conclusion
Target Corporation stands out as offering immense customer satisfaction with a great market presence. However, the corporation faces stiff competition with a greater need to differentiate and personalize and greater opportunities in the global market that could spur more growth.