BusinessWeek reports that Target stores seem to be losing some of the “hip” cachet that separated the company from Wal-Mart for the last few years, as shoppers see fewer distinctions between the two mass merchandisers.
“The weak economy isn't helping,” BusinessWeek writes, “but analysts say blame also lies with Target's strategy. It has long aimed at drawing higher-end buyers into the stores with its zippy ads, designer apparel, and trendy kitchen doodads, in hopes that they'll buy plenty of discount-chain staples such as detergent, paper plates, and toothpaste. But buyers are no longer flocking to Target for its cool stuff -- and those who do often skip the staples in favor of cheaper rivals like Wal-Mart Stores Inc.”
The result? Higher costs, such a marketing budget that is 2.4 percent of sales, compared to Wal-Mart’s 0.3 percent.
In addition, Target’s approach to clothing is being squeezed by both Wal-Mart and Kohl’s.
“The weak economy isn't helping,” BusinessWeek writes, “but analysts say blame also lies with Target's strategy. It has long aimed at drawing higher-end buyers into the stores with its zippy ads, designer apparel, and trendy kitchen doodads, in hopes that they'll buy plenty of discount-chain staples such as detergent, paper plates, and toothpaste. But buyers are no longer flocking to Target for its cool stuff -- and those who do often skip the staples in favor of cheaper rivals like Wal-Mart Stores Inc.”
The result? Higher costs, such a marketing budget that is 2.4 percent of sales, compared to Wal-Mart’s 0.3 percent.
In addition, Target’s approach to clothing is being squeezed by both Wal-Mart and Kohl’s.
- KC's View:
- Here’s another point not made by BusinessWeek. Target has not been as aggressive as Wal-Mart in using food to generate higher traffic and increased revenue. This is too bad, because we thought Target had something unique to bring to this competition.
