retail news in context, analysis with attitude

Sources have supplied MNB with a memo sent by Target CEO Gregg Steinhafel and Kathee Tesija, the retailer’s Executive Vice President, Merchandising, to suppliers in which it lays out its “strategy for success” this year, which mostly seems to be focused on competing more effectively with online retailers.

The missive reads as follows:

“As we all know, the retail landscape is changing at a more dramatic pace than ever before. Due to the rapid adoption of new technology tools, consumers now expect a seamless cross-channel experience, want complete transparency on price, and are using technology to find the best deals regardless of retailer or channel.

“We understand and appreciate consumers’ desire to find the best price, and we are absolutely committed to delivering the differentiated, high-quality merchandise Target is known for at low prices.

“What we aren’t willing to do is let online-only retailers use our brick-and-mortar stores as a showroom for their products and undercut our prices without making investments, as we do, to proudly display your brands, create a superior guest experience, provide hundreds of thousands of jobs, and support local communities.

“As a result, we want to share with you our strategy for success in the ever-evolving retail environment and our expectations for your partnership with us.

“First, although our multichannel strategy has been a key area of focus for Target for several years, we have recently committed to increase our investment in human and financial resources to enhance our multichannel capabilities.

“Second, we will be challenging each of you, as our most important vendor partners, to work with us to develop an assortment that will allow Target to be competitive and profitable across all channels. The specifics of the programs will vary by vendor and category, but could include providing a differentiated guest-focused assortment from online-only retailers that still includes best sellers … pricing the same as online-only retailers without lowering our overall JBP margin … developing membership- or subscription-based pricing online to compete with online pricing models in the market. Our Merchandising team will contact you this month to discuss these plans in more detail.

“Target has long prided itself on being a retailer that has truly collaborative vendor partnerships that are focused on the long term. You can count on us to work tirelessly toward mutually-agreed-upon goals that build your brands and business, and we ask that you help us deliver the best possible quality and prices for our guests.

“Thank you for your ongoing partnership. We look forward to working together in 2012 to bring your products to more than 180 million guests and to deliver on Target’s ‘Expect More. Pay Less.’ brand promise, anytime, anywhere.”
KC's View:
Target would seem to have the right idea - having a differentiated assortment and experience that allows it to compete more effectively with online retailers. But actually accomplishing it will be something quite different.

Some of its recently announced moves make sense, like opening boutiques and even mini-Apple Stores inside some of its locations. But I’m less sanguine about its long-term chances.