Key Strategies of Target

Target

One of the top three retail companies in the United States is Target Corporation. In contrast to its primary rivals, such as Costco and Walmart, the corporation solely has operations in the United States. Although this limits the company’s reach, it also causes a high density of Target stores per square area in the USA. Due to this, the business is able to contact more Americans than its rivals. The business model of Target is very interesting to examine because the corporation has thoughtfully incorporated several strategic insights into it. Growth is the overarching goal of Target’s business plan, regardless of how its client base evolves.

In this article, I’m going to be exposing the business strategies of the multi-billion dollar firm and how it plans to stay competitive in the retail industry. Without further ado, let’s dive in.

Target Brands

Target’s business strategy is centered on its own brands. Despite sourcing goods from all around the world, Target has developed a number of private labels that they sell in-store. Target owns and sells more than 40 different brands. Nearly one-third of the company’s income comes from just this proprietary line of brands. The exclusive nature of the private brands gives Target a competitive edge over rivals in terms of attracting more customers to its stores and retaining existing ones. This tactic has successfully complemented Target’s business approach. It aids in differentiating Target’s business strategy and enables Target to regulate the caliber of the goods supplied in its shops.

Since the corporation either manufactures the goods for self-owned trademarks internally or has outside manufacturers make them, The goods market is largely dominated by house brands, which also aids the business in differentiating its product ranges. This feature of Target’s business model is crucial to its revenue generation.

Online Market

The company’s e-commerce operations contribute significantly to its overall revenue. The corporation has maintained its competitiveness and advantage over rivals thanks to its e-commerce operations. The majority of the rivals either don’t participate in e-commerce or have a low participation rate. In this market, Target faces the greatest threat from Amazon. Target’s business model benefits from having a sizable presence in the E-commerce industry as it strategically diversifies its activities. This aids the business in becoming more effective across the board as e-commerce operations necessitate an efficient supply chain. Target’s economy pricing model makes it a particularly attractive partner for brands looking to keep their operating expenses low.

Overall, Target’s business strategy now relies heavily on e-commerce.

Marketing and Promotion

The reputation of the company is one of its most crucial components. The business strategy of Target has been designed in such a way that it continuously looks after the reputation of the brand.

Instead than selling cheaper things in bulk, Target sells high-end, trendy goods at lower costs. Target has been able to attract more of the millennial population with the help of this technique and its branding as a high-end retailer offering premium goods at discounts. One of the company’s senior executives said that the median age of their clients is the lowest among all of their rivals. Instead than investing more in conventional marketing channels, Target’s business plan places a greater emphasis on social media branding. The user experience remains a key component of Target’s business model and strategy. Target has carved out a niche for itself thanks to this tactic, one that is particularly appealing to generation Z.

Target Cards

The fact that Target does not use a membership-based structure is another way in which their business strategy is unique. Instead, it provides its clients with debit and several sorts of credit cards. Red cards are the name of the company-issued cards. Red card holders are provided specific discounts, offers, and cashback helping the business maintain a base of devoted clients. For instance, customers who use the red card receive a 5% discount on practically all items they purchase from the business. From affiliated banks and organizations that assist in the provision of these cards, the firm receives a portion of their income. This improves client retention, generates revenue, and has consistently contributed significantly to Target’s business strategy. In collaboration with financial institutions, Target generated more than $500 million in income from its credit and debit cards. Since the business model relies on the user constantly using the company-issued card to make purchases at the store, this is a reliable source of money.

Positioning of Retail Outlets

The business strategy of Target is continuously modified to reflect the times. Target is a good example of a company that has reduced the size of its stores to fit its marketing strategy of appealing to the young urban population. Additionally, they intentionally place their stores in high-traffic areas where locals can access them. This action, which is a component of Target’s business model, has also increased profit margins.

Merchandise Sales

The selling of merchandise accounts for the majority of Target’s income. The sales from products accounted for over 95% of total revenue in 2020.

Nearly one-third of Target’s overall product sales comes from its own brands, with the remaining two-thirds coming from the sale of other brands. As opposed to selling bulk goods, Target Corporation’s strategy is to represent itself as a seller of high-quality goods.

Target Partnership

Target frequently collaborates with designers and other firms to offer their goods such as food, baby products, household supplies, and other commodities through their shops while receiving a sizable profit share. Such alliances benefit both sides and aid the partner brands in keeping up their premium brand reputation.

Transformation of some stores to mini malls

In recent times, some Target retail stores have undergone renovation and transformation to become mini mall. A massive amounts of its retail outlets have seen this transformation and the company is making plans to add to that number. As a matter of fact, more than half of its stores have been transformed. Target Corporation envisions this a strategy to retain its customers and add to the number of visits it stores get. It is seen as a way to ensure that its customers always return.

Investment in its logistics

Target encourages customers to use its website for their purchases in part due to the quickness of its delivery service.

It is expanding the number of specialized sortation centers, which enable products to be delivered to clients in roughly a day. It launched its first sortation facility close to its Minneapolis headquarters last year. The back of Target’s stores serve as the fulfillment center for almost all of its online orders. The unique facilities make it easier to remove such goods, organize them by zip code, and deliver them more swiftly to consumers’ doors. As Target waited for carrier partners like UPS and FedEx to pick them up for delivery, one of its employees claimed that packages used to swarm the back of stores and languish there for hours. Now, he claimed, Target can clear the packages for delivery at the store’s rear three or four times daily, freeing up area for staff to continue choosing and packing products and bringing them closer to their final destination. This investment strategy is a way of retaining its customers and encouraging new customers to join the retail family, especially the generation Z which engages in online shopping than visiting physical infrastructures.