Introduction: Target Corporation started with a man named George Dayton. He opens a store in downtown Minneapolis called Goodfellows, later the name changed to Dayton Dry Goods Company, then to The Dayton Company. In 1946, The Dayton Company began a tradition to donate 5% of the profits back to the community. In 1962 at Roseville, Minnesota the Dayton Company opened the first Target store. I had an interview with the Ms. Olivia Padilla, one of the Target managers at Sharptown location. She said that Target is an upscale
discounter that provides well-know national brands at discounted prices in clean, organize store and where customers are treated like a guest. According to the statistics, there are 1249 Target stores in 47 states , including 119 Super Target stores and 19 distribution centers. The store target age of 45, household approximately $57,000; 90% of the customers are female and about 39% have a family and 44% are college graduated. The Dayton Corporation merged with the J.L. Hudson Company and became the DHC. The Dayton Hudson Corporation acquires Mervyn’s in 1978, became 7th largest U.S. retailer. Mervyn’s is a promotional, middle market, neighborhood department store. It was founded in 1949 in the San Francisco Bay area in Hayward, California. Mervyn’s target female who is the ages of 33-54 year old that are typically married with children and works outside the home. The median household income of $56,000 and 42%
have completed college. There are 266 stores in 14 states and 4 distribution centers employ approximately 29,000 employees. Mervyn’s generated $3.6 billion in revenue and $160 million in pretax segment profit. In 1984 Dayton’s and Hudson’s joined together to form Dayton Hudson Department Store Company, which was the largest U.S. independent department store. Six years later, Dayton Hudson Corporation acquires another department store named Marshall Field’s. The store emphasized
fashion leadership, quality merchandise and superior guest service. On the average Marshall Field’s draws married woman ages 49 of income $68,000 and approximately 30% have children living at home. More that 50% have attained at least an undergraduate degree and about 75 % are white collar customers. There are 62 stores in 8 states and 3 distribution center with approximately 25.000 employees . Marshall Field’s produced revenues of $2.6 billion and pretax segment profit of $107 million. Then in 2000, Dayton Hudson Corporation changed its name to Target Corporation. Bob Ulrich, chairman and chief executive officer of Target Corporation, said, “We have dedicated significant effort to increasing sales and profits at Mervyn’s and Marshall Field’s over many years. As responsible stewards of the corporation’s assets, we believe that it is appropriate at this time to identify and evaluate possible strategic Target Corporation on August 12, 2002, started a comprehensive web site, with million of products from Target, Marshall Fields, Mervyn’s and
Amazon.com at on e convenient location at www.target.com. The site is powered by Amazon.com. Guests will find products including brands like Waterford, Mossimo, U2 and designer of Michael Graves, Amy Coe, Sean Conway; Target also carried exclusive line of Sony Liv electronics. The Web site offered a broad selection of assortment of hip, chic products all at one place. From the target website above, the market capitalization of Target Corporation is being the 4th largest in the nation, and top 25th on Fortune 500 list in 2003. Also Target been recognized as a “Top Work Place for
Women” advancing women into leadership positions. The corporation been awarded for several things such as top in training, best CEO, best for leaders. Also, know for their generous tradition of donations of $2million a Target strives to provide the best place to
week back to the community.
buy high-quality merchandise at low prices in surroundings.
In addition, guests visit target.com will benefit from Amazon.com’s e-commerce technology platform. This includes personalization, product recommendations, search functionality across all stores, one-click shopping, and one convenient checkout incorporating all stores. The web site technology services, Amazon.com will also provide order fulfillment and guest services for targe.com. On the other hand, the website Target.direct, the electronic retailing and direct marketing division of Target Corporation,
will continue to manage the fulfillment for items purchased under the Marshall Field’s and Mervyn’s brands on the Web site. According to the Business Weekly, Robert Berner stated that in 2002, as Target’s competitor, Wal-mart expanded to a dominant force in the economy, with the revenue of 2.3% of the U.S. gross domestic product. Before, Marshall Field’s represented 2% of the economy in 1881, but now it is just 6% of Target Corporation sales. There are four forces that cause a leading retailer to fall: Dramatic changes in customer buying behavior and tastes; Organized resistance form government and union; Emergence of competitors that either beat it at its game or take the game elsewhere; Failure of internal control processes due to the ubiquitous growth imperative. Why SuperTargets are not doing as well as their competitor WalMart? Throughout the data that I have collected from Ms. Padilla, I think because of the Supertargets are located in more urban areas, where expenses are higher. Consumers are not willing to drive that far because of traffic, and would rather go to other neighborhood grocery stores. They are excessively spread out geographically, forcing Target to rely on outside distributors, which increase Target’s cost of goods. Even though, Target offered a variety of assortments and brand names such as Mossimo and Michael Graves, it would not be able to beat superefficient Wal-Mart on price. Wal-Mart pioneered the idea of coupling a discount store with supermarket and has become the nation’s number one
grocer. But while Wal-Mart’s Supercenters lure shoppers back 3.1 times a month, SuperTarget’s shoppers visit only about 2.1 times a month, not much more often than they go to a regular Target stores, says researcher Service Industry Research System Inc. As said by Stephen J. Hoch of the Advertising Age article, the SuperTargets in the Minneapolis location stated that their sales are 50% to 100% higher than its standard stores. Target has opened just 82 SuperTargets since 1995, and new openings will account for just 25% to 40% of square-footage growth next year. Wal-Mart, on the other hand, has opened 1,243 supercenters since 1988, and the format will account for about 210 of 335 openings next year.
Overview
Target Corporation is a continuous growing company that focused on general merchandise retailing. The principal operating strategy is to provide exceptional value to American consumers through multiple retail formats ranging from upscale discount and moderate-priced to full-service department stores.
Primary Issue
Target Corporation’s primary issue is with the success of Target average revenues of $41 billion and $3.5 billion in pre-tax segment profit. While Mervyn’s revenues are only $3.6 billion and $160 million pre-tax profit; Marshall’s Field’s total $2.6 billion and $107 million profit. The combination of Mervyn’s and Marshall Field’s are struggling to make the revenues does not even added up near half of Target’s revenues and profits.
Secondary Issue
Target and Wal-Mart are competing to be your neighborhood one stop shopping store. Even though Wal-Mart and Target started in 1962, Wal-Mart still defeats Target in both the number of sales plus stores.
TARGET NUMBER OF SUPERCENTERS 82 SUPERCENTER SALES $4.35 bil. LOCAL MARKET SHARE* 1.35% PLANNED OPENINGS** 30-35
WAL-MART 1,243 $80 bil. 4.51% 200-210
* Per store in 2001 ** In 2003 http://80-web12.epnet.com.ezproxy.lib.uh.edu/deliveryprintsave.asp
Questions
1. So what may be some factors that would cause a leasing retailer to take a tumble? Looking back at retail history, I have identified four forces that have played a role. They are: dramatic changes in customer buying behavior and tastes; organized resistance from government and unions; emergence of competitors; failure of internal control processes due to ubiquitous growth imperative. 2. What is wrong with some of the location of SuperTargets? For starter, they are located in more urban areas, where expenses are higher, customers won’t drive as far because of traffic and other grocery rivals. 3. What is a difference between Target and Wal-Mart merchandise? Target heavily promoting the signature style of the creator of the designer’s merchandise, while Wal-mart focus on the low price budget end items. Although Target does not open 24 hours, but because of that they always have a clean, safe, spacious environment.
Recommendations
The Corporation should do away with Mervyn’s and Marshall Field and either replace with a Target or a SuperTargets. Therefore, expanding the stores and increasing the profits. One of the ways that Target can beat Wal-mart is rapidly expanding new stores around the nation. Mean while Target should remain in its own unique way of promoting itself.