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BIG CITY, SMALL TARGET

BIG CITY, SMALL TARGET. Michael Barrata. Juan Escobar. Nancy Kim. Anna Toczek. OVERVIEW. TARGET’S HISTORY. 1967 Dayton Corporation goes public with its first offering of common stock. 1970’s For the first time, the corporation's revenues top $1 billion. 1984

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BIG CITY, SMALL TARGET

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  1. BIG CITY, SMALL TARGET Michael Barrata Juan Escobar Nancy Kim Anna Toczek

  2. OVERVIEW

  3. TARGET’S HISTORY • 1967 • Dayton Corporation goes public with its first offering of common stock • 1970’s • For the first time, the corporation's revenues top • $1 billion • 1984 • Revenues more than double to • $10 billion • Dayton's and Hudson's combine to make the largest independent U.S. department store • 2000 • Dayton Hudson Corporation begins a new era with a new name: • Target Corporation • 1902 • Founder George Dayton opens his first store, named Goodfellows, in downtown Minneapolis, Minn. • 2005 • Revenues exceed • $50 billion • 2011 • Target Today 1900 2020 1920 1940 1960 1980 2000

  4. TARGET TODAY

  5. TARGET TODAY

  6. BRAND IDENTITY

  7. GUEST DEMOGRAPHICS

  8. COMMUNITY CONTRIBUTIONS

  9. SITUATIONAL ANALYSIS • People who live in densely populated urban areas love Target. • Unfortunately, many of these guests must travel to neighboring suburbs to shop at the closest Target. • The size of a typical Target store (60-80,000 square feet) makes building new stores unrealistic in urban settings. • Develop CityTarget with square footage only 40-60% of what a normal Target store would be and backroom storage for excess product will be less than half of our full size format store.

  10. URBAN DEMOGRAPHICS Target Urban Populations (As of 2010) LOS ANGELES 3,792,621 CHICAGO 2,695,569 BROOKLYN 2,504,700 SEATTLE 608,660 ATLANTA 540,922

  11. CASE STUDY OBJECTIVES

  12. COMPETITIVE ANALYSIS

  13. WALMART Walmart is the #1 discount retailer in the United States Annual Revenue: $421.85 Billion • Number of Stores:9,600 retail units and operates in 28 countries Illinois Statistics:There are 151Walmart stores in Illinois, including discount stores, supercenters and neighborhood markets Average Store Size: • Supercenter: 185,000 sq. ft. with approx. 142,000 items • Discount Store: 108,000 sq. ft. with approx. 120,000 items • Neighborhood Market: 42,000 sq. ft. with approx. 29,000 items

  14. WAL-MART • Plans for the Future: • Grow by shrinking size in Neighborhood Markets in urban areas • Revert to emphasizing low prices and adding back thousands of products Target has higher brand perception, while Walmart has an operations advantage Target shoppers have higher brand loyalty than Walmart shoppers

  15. K-MART Kmart is the #3 discount retailer in the US, behind Wal-Mart and Target Annual Revenue: 15.59 Billion Number of Stores:1,300 off-mall stores in 49 US states, Puerto Rico, Guam, and the US Virgin Islands Illinois Statistics: There are 78 K-Mart store locations in Illinois • Average Store Size: • 1,278 discount stores, averaging 93,000 sq. ft • 29 SuperCenters, averaging 169,000 sq. ft • Plans for the Future: • Repositioned itself from a promotional-pricing retailer to everyday-low-price retailer • Resulted in alienating their current shoppers who favored promotional pricing • K-Mart shares the same, slow-death fate as it’s parent company, Sears

  16. JEWEL-OSCO • Plans for the Future: • Sell fuel centers and partner with them • Couche-Tard/Circle K will purchase 27 Jewel-Osco fuel centers • Use of Groupon • Customers place their order through Groupon and then can pick up the deal using their Jewel-Osco Preferred Customer Card • Project SHE • “Simplify Her Experience” - Cut items and brands • Annual Revenue : $37.10 Billion • Number of Stores: • 182 grocery stores in the Mid-west • 1,124 SUPERVALU stores in the U.S • Illinois Statistics: • 34 Jewel Oscos in metropolitan Chicago • Average Store Size:49,000 sq. ft

  17. WALGREENS • Walgreens leads the chain drugstore industry in • sales and profit • Annual Revenue : $72.2 Billion • Number of Stores:8,235 in all 50 states, the District of Columbia and Puerto Rico • Illinois Statistics: • Over 50 locations in the City of Chicago. • Average Store Size:14,500 sq. feet  • Plans for the Future: • Plans to open or convert 1,000 “food oasis” stores over the next 5 years • Grow stores’ base by approximately 2.5 to 3 percent in fiscal 2011.

  18. CVS PHARMACY • Annual Revenue : $55.6 Billion • Number of Stores:7,182 stores nationwide • Illinois Statistics: 192 locations in Chicagoland area • Average Store Size: • 15,000 sq. fee • Plans for the Future: • New CVS/pharmacy mobile features offer convenience for on-the-go shoppers • Keep its retail and pharmacy benefits management businesses together

  19. ECONOMY • Recessionary Economy • Rising unemployment • October 2011: 9.0% • Depressed housing market • Still-recovering stock market • Tightening household budgets • Changing Consumer Behavior • Consumers are buying only the essentials and are using any excess cash to pay down debt • 49% look for sales and deals • 46% buying only what they truly need • 40% are using more coupons than before • 15% are buying in bulk • Most consumers claim that their current recession-related shopping behaviors will continue as the economy improves

  20. RESEARCH METHODS

  21. RESEARCH FINDINGS The economy has affected my shopping behavior. • Effect of Recessionary Economy • Strongly Agree: 61% • Agree: 33% • Consider direct mailing of coupons & customer incentives such as a “club card” When I go shopping, convenience is important to me. • Importance of Convenience • Strongly Agree: 54% • Agree: 40% • Consider many locations, a wide variety of products, and “one-stop shopping”

  22. RESEARCH FINDINGS • Preferred Convenience Store • Target: 54% • Wal-Mart: 29% • We have favorable prospects, but Wal-Mart is our main competitor. 8% 7% 6% 54% 29% At which of the following stores do you prefer to shop?

  23. RESEARCH FINDINGS • Number of Items Purchased per Visit • 0-5 items: 47% • 5-10: 40% • Little investments in shopping carts, emphasize baskets and bags, optimize fast checkout lanes. How many items do you usually buy when shopping at Target? • Top 3 Departments • Cut departments that are not popular. Smaller store formats will include less departments than larger, 2-story stores.

  24. SWOT ANALYSIS I Opportunities Open smaller, even more convenient store in big cities Expand presence in the U.S. Establish presence internationally Start a club card Focus on cost-cutting to lower prices of products • Threats • Competitors: Wal-Mart & K-Mart • Recession in the U.S. Economy • Maintaining low costs with stylish images • to stay on top of consumer trends Weaknesses Lack of urban presence Small pharmacy market share Lack of international presence Less number of stores compared to competitors Prices are not as low as some competitors • Strengths • Superior customer service • Well-known brand recognition • Convenient “one stop shop” • Wide selection of products • Offers well-known brands • Maintain value based low prices • Overall appeal of store • Clean • Bright • Inviting • Dedicated to community

  25. RECOMMENDATIONS • Focus mostly on adult and personal products • Electronics, groceries, and alcohol • Offer free parking • Offer miniature carts and new, innovative foldable bag • Quick-find layouts and presentation style • Just-in-Time supply chain & new inventory stocking strategies • Incorporate traditional marketing with new tactics • Guerilla marketing with neighborhood manhole covers

  26. PRODUCT RECOMMENDATIONS Electronics Current Target shoppers agree this is one of the most visited departments in the store, and one of the areas where they spend the most time shopping. A generous assortment of cameras, iPods and iPod accessories is needed. The need for cameras will also satisfy the demand by tourists.

  27. PRODUCT RECOMMENDATIONS Groceries A comprehensive assortment of grocery items, including organic and gluten-free selections is required to satiate the lifestyle of local, affluent residents. Additionally, City Target should target the large workforce in the area by offering lunch-time meal solutions, and offering amicrowave where shoppers can heat up frozen dinners.

  28. PRODUCT RECOMMENDATIONS Alcohol Sales The sale of alcoholic beverages allows City Target to compete in the “convenience market”. A focus on craft beer will provide City Target a competitive advantage of a growing trend, accompanied by higher margins. Stocking beers in high demand by local breweries, like Goose Island also gives Target a way to connect with their target market.

  29. NEW PRESENTATION LAYOUTS • Store layouts will vary depending on location • Product selection depends on size, prioritizing categories based on essentials and survey results • One –Story Sample Layout • 14,500 sq. ft • Small selection of products

  30. NEW PRESENTATION LAYOUTS • Two-StorySample Layout • 40,000 sq. ft • Comprehensive selection of products

  31. NEW PRESENTATION LAYOUTS • New shelves maximize spacing • Slider shelves in front of traditional shelves • Lightweight and easy for customers to navigate

  32. PARKING • Highly recommend having parking available for Chicago shoppers • Street parking • Existing parking structures • Partnerships with nearby lots 77% of Chicago shoppers agree that parking is important to them Parking is important to me.

  33. MARKETING TACTICS • Aside from traditional media marketing: • An emphasis on guerilla marketing • Nearby manhole covers • Bus and train billboards, including nearby stations • Pharmacy drive-thrus • Fairs and street festivals

  34. MARKETING TACTICS • Streamline e-marketing • Search Engine optimization and advertising • Social Media presence and advertising • Improve and debug Target app • Focus on “Daily Deals” • Refine search

  35. ADVERTISING CAMPAIGN KEEP MOVING • “CityTargets has everything I need, all in one place. I’m always on the go and Target • keeps me moving.”

  36. FOLDABLE BAG • A reusable bag with chic and attractive designs that fold into the form of a 3 x 3 Target bulls-eye • Easy and convenient to carry around all the time • Contribute a portion of profits from bags to give back to the community

  37. INVENTORY & SUPPLY CHAIN • Small back stockroom • Stock is stored on top of shelves • Cover inventory to maintain clean appearance • Inventory delivery is more frequent • Just-in-Time system • Ex. Fresh groceries

  38. MERCHANDISING STRATEGY

  39. SWOT ANALYSIS II Weaknesses No presence internationally The over emphasis on quality makes it more expensive than its competitor Wal- Mart The brand popularity is relatively low compared to its competitors Threats Competitors such as Wal-Mart have expanded the new concept of a smaller store within the city Various other competitors exist such as Walgreens The economy that has customers focusing on better prices versus quality Opportunities Expansion into foreign market such as Canada The focus on reducing operational costs and raising revenue Its appeal to the urban market Providing the same quality and convenience for the Urban guest Strengths The revenue of the company increases every year with current revenue at 67.390 Billion The stores are divided to satisfy the type of customer at the location through it differentiation division such as SuperTarget, CityTargets, and Target Greenlands The different product strategy emphasizes more on quality Target is the top gift card seller in the US Target Corporation is environment friendly They have strong distribution channels They have an increase in profits every year They have a large market share within the US

  40. WRAP-UP

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