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2014-08 Target 5 Slides

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  © Copyright 2014 Kantar Retail 1   August 2014 The Five Slides You Need: Target  © Copyright 2014 Kantar Retail Copyright © 2014 Kantar Retail. All Rights Reserved. 501 Boylston Street, Suite 6101, Boston, MA 02116 (617) 912- 2828 howard.zimmerman@kantarretail.com No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photography, recording, or any information storage and retrieval system now known or to be invented, without the express written permission of Kantar Retail. The printing of any copies for back up is also strictly prohibited. Disclaimers The analyses and conclusions presented in this seminar represent the opinions of Kantar Retail. The views expressed do not necessarily reflect the views of the management of the retailer(s) under discussion. This seminar is not endorsed or otherwise supported by the management of any of the companies covered during the course of the workshop or within the following slides.  © Copyright 2014 Kantar Retail S W O T OPPORTUNITIES ã Price comping limits gross margin in consumables/commodities — but consumer still perceives that prices are higher ã Out-of-stocks more problematic with lean inventory management, especially in consumables and sale items ã Slow to respond because of Inflexible culture and bureaucracy ã Margin implications as consumable sales share grows, as well as higher penetration of 5% Rewards ã Very narrow margin of error, small deviations become expensive ã Urban site growth is on pause ã Planning calendar can limit ability to make last minute changes ã Multichannel is limited and behind biggest competitors ã Shopper penetration continues to trend downward ã Strong brand recognition and reputation for innovation ã Market positioning leader ã Good real estate ã Loyal core guest with higher disposable income vs. competitors ã Clean stores, wide aisles, and very shoppable ã Efficient supply chain geared for lean inventory management ã Strongly coordinated social media campaign capabilities ã Branded credit and debit card product, the REDcard, offers a strong and simple value proposition ã Excellent corporate reputation for charitable giving (St. Jude's, Education, Arts, etc.) ã Strong and popular exclusive/private label brands in discretionary ã New store segmentation process & tools to optimize assortment ã Converting the shopper to increase visits through fill-in trips for food and frequently purchased categories and then purchase more discretionary items ã Urban CityTarget and TargetExpress format pilots have been successful, particularly with garnering high foot traffic, and the format’s much smaller stores will have increased site availability   ã Capturing Millennial shoppers via mobile tools, social media, and other digital vehicles ã Developing greater integration between physical store, website, and mobile experiences ã Communicating the Pay Less /price comp message to different guest segments ã New leadership speeding up decision making ã Increasingly tight inventory controls potentially restrict sales and limit flexibility when there is suddenly unexpectedly high demand  –  particularly with recent SKU rationalization ã Repeated OOS in commodities may frustrate shoppers who will dismiss PFresh’s  fill-in value proposition, reducing trip frequency ã Continued shrinking shopper base ã High-level transitions may lead to uncertainty on strategic continuity ãTarget's historical best‖ guest focus still hamper efforts to expand beyond its most loyal shopper base ã High costs and low sales in Canada must be quickly improved in order to justify long-term market viability STRENGTHS WEAKNESSES THREATS  © Copyright 2014 Kantar Retail New Leadership, New Priorities for Growth Following the 2013 holiday data breach, Target confronted its immediate and significant long-term sales and shopper penetration challenges. Corporate CEO Gregg Steinhafel and Target Canada President Tony Fisher both left the company, and were replaced by Brian Cornell and Mark Schindele, respectively. The company announced a three-pronged plan to improve its performance: Increase U.S. Traffic and Sales : U.S. physical store sales represented 95% of Target’s overall revenue in 2013, and will continue to be a supermajority of sales over the next five years. Target will focus on three key strategies for the U.S., and is testing its newest TargetExpress format.  – Merchandising newness and innovation: Target will continue to assert differentiation in products through exclusives, new items, and private brands, with flagship categories in home and apparel. Target is also emphasizing a more curatorial approach for its consumables by offering programs that highlight ―Expect More‖ solutions that avoid direct price comparisons and protect margin.  – Presentation excitement: Target seeks to drive ―Expect More‖ differentiation with personalized service to demonstrate value beyond a fulfillment center. Beauty Concierge is now in 400+ stores, Baby 360 has expanded to 200+ stores, an enhanced apparel presentation with mannequins will be in 600 stores by fall, and a few stores are testing a more interactive electronics layout.  – Irresistible offers and promotions: Target continues to sharpen its price messaging and tactics. Achievement of deeper discounts is now encouraged through the stacking of limited time offers, REDcard savings, the Target low-price guarantee, and Cartwheel coupons. Significantly Improve Performance in Canada : Target plans to move rapidly past its first year stumble through a three-pronged approach, including improving in-stocks, hone pricing, and expand the merchandise assortment. Lead in Omnichannel : While Target has made significant advancements in digital, mobile, and omnichannel efforts, the retailer aims to move faster to eliminate barriers and create a seamless guest experience. The retailer has significantly expanded the digital team and has pushed hard to expand its current non-store offerings. Cartwheel celebrated its first year, and guests can now purchase items through the Target and Target Style Instagram account . Target’s subscription service expanded to over 1,500 SKUs in baby, food, OTC, personal care, pet, and office supplies. Over one million store pickup orders were placed by spring 2014, and Target is now testing store to home delivery. Rebuilding the ―Expect More. Pay Less‖ proposition   Source: Kantar Retail research and analysis 4
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