http://www.investopedia.com/articles/investing/032216/shortsighted-retailers-why-target-losing-retail-wars-tgt.asp?partner=YahooSA
Target Losing the Retail War
Target has been known for a long time as a trendier alternative to its more bland and less amicable competitors K-Mart, Sears, and Walmart. While, they have strayed the retail death march brought on by online competitors such as Amazon.com, Target's lack of innovation could lead to their demise.
First off, when Target sought out to expand business in 2010, they did so by establishing a greater amount of brick and mortar stores internationally in Canada. What they had abandoned was their retail sector which would have sought the most growth in recent years. Amazon has seen exponential growth in the sector since our domestic economy has made recoveries, however Target has begun hemorrhaging money since the expansion of their brick and mortar constant.
Investopedia believes that their biggest mistake is a lack of focus. It would appear that target had aimed to concentrate itself for expansion in four sectors - style, baby, kids, and wellness. It had also sought to expand its grocery part of the business - all while decreasing the amount of SKU's in the store.
It would appear that target is continuing to exist in the past, while their main focus should be on sustained growth of the smallest part of their business. Even though their online retail sector grew 30% last year after a billion dollar investment, online sails still only equate to 3.4% of total sales. Maybe Target should be a bit more like Phillip Morris (reference to Collins' Good to Great, Phillip Morris expands sales by focusing on the smallest part of the business and avoiding US sanctions after they expanded their international market).
This article is very interesting because now that I think about it, Target really has been lacking in innovation compared to competitors that I have personally been buying from over the years. It sounds like Target really needs to focus on more technological improvement/expansion rather then physical improvement/expansion. Target can do so much for the business by focusing on online sales expansion. This company needs to utilize technology of the age and realize where business is going in the future. While putting up buildings in Canada may be beneficial, many other foreign markets need to be pursued by Target. The world is going global and that's where the future money is. Target needs to think differently about their business growth strategy.
ReplyDeleteI wonder what the thinking was behind expanding more brick and mortar places despite what seems to be a pretty clear change in the direction companies like these are functioning. Yeah I am not sure what I think of when I think of target anymore regarding their niche. Many of the electronics or various goods I purchase can be off amazon nowadays, without needing to take a trip to target.
ReplyDeleteI agree with Jake. I remember going to Target as a child, and I remember it being the exact same as it was when I visited a Target store two weeks ago. Also, I believe Target must seriously increase their advertising efforts to increase online sales. With online shopping rapidly expanding, Target must make a better effort to increase their online sales if they want to remain competitive in their industry.
ReplyDeleteThat is really surprising to me because I feel like target is replacing Sears and K-marts around me, but that may just be my area. Additionally, I have seen more of an advertising effort from them compared to other retailers. As far as their online sales goes, I think things like that just take time and eventually they will start to pick up as people start to realize that target is competitive on the online market as well.
ReplyDeleteThat is really surprising to me because I feel like target is replacing Sears and K-marts around me, but that may just be my area. Additionally, I have seen more of an advertising effort from them compared to other retailers. As far as their online sales goes, I think things like that just take time and eventually they will start to pick up as people start to realize that target is competitive on the online market as well.
ReplyDeleteUntil this article, I never really thought that Target would be on the demise. However, I would agree with Jake and Charlie in the sense that the store has been practically identical throughout the past couple years. But, in a way that's a good thing. At least where I'm from, Target has cheap, but good looking clothes for almost any age. They have also recently added on a produce and grocery section to the store. In addition, I do believe that Target does need to look to increase there online sales to help keep them afloat. It'll be interesting to see how Target holds up in the upcoming years.
ReplyDeleteHonestly, I don't really see a good outcome for Target in the future. I don't really see how they can improve themselves or make themselves any different from their competitors. It seems like for any of these companies improving their online sales is their best option, but I am sure they have been aware of this for years now, so what more can they do that they have not already done or tried to do. At least for me, clothing products are really the only items I prefer to purchase in a store because of fitting purposes, and anything else could be purchased online. Overall, if Target is on the decline, I don't see how they can improve relative to their competitors.
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