Summary Of Why Target's Cheap-Chic Glamour
The article I chose to review is from the September 26-October 2 Bloomberg Businessweek. The title is “Why Target’s Cheap-Chic Glamour is Fading.” This article explains how Target is beginning to look very similar to competitor Wal-Mart, and is being affected by the industry. In the article, it opens with explaining how discussing Target‘s 2011 same-store sales, Chief Financial Officer Douglas Scovanner pointed out that Wal-Mart had been struggling with “weak retailing performance.” The article then explains that for years Target has been seen as the trendier, hipper version of Wal-Mart. But as of late that hasn’t been the case. Target has been struggling the same amount and with the same issues as Wal-Mart. Their share price has dropped
14 percent this year. Many are noticing that the employees at Target are not as happy as one would expect, and many comparisons of the wages and benefits of employees are almost identical to rival Wal-Mart. Target used to be known as a leader in cheap-chic clothing. Now, the cheap-chic idea that Target had started is being copied by other stores as well. As the economy tightened, people left Target for Wal-Mart. Wal-Mart has low prices. That’s about it. Their service sucks, their employees are unhappy, and for the most part, low prices is the only thing they offer. As the economy tightened up, Target was no longer the go-to store. It was predicted by Wall Street that after the economy rose, people would go back to Target, but this has yet to happen. Consumers are still shopping at Wal-Mart. Fewer stores are being opened lately by Target. In order to boost sales from less stores opening, groceries have become part of the product lineup. Target also offers 5% off of purchases when using their credit or debit cards. Although this creates revenue and increases the amount that a customer spends, it hurts the bottom line. Once you take out the low-margin groceries and the 5% discount, Target and Wal-Mart report having very similar same-store sales growth: about a 1% increase. Target may be doing away with its 5% discount soon. In order to buy more stock and pay down debt, Target plans to sell the credit-card division. Similar to Wal-Mart, Target only receives 2 percent of its revenue from online services. Target recently received their website back from Amazon in August. As soon as the website changed hands, the website wasn’t even working properly. Ironically, the link that stated “learn all about what’s new” didn’t even work. Earlier in September, Target’s website crashed when a massive response for a new line of products were more than expected. Target executives are still looking up for the second half of the year. Target executives pointed out a 4 percent jump in same-store sales in August and plan to open small-format stores in both the US and Canada and are hoping to improve e-commerce. By making these adjustments, they hope to improve revenue 48 percent and to $100 billion by 2017. There are a few other issues facing Target. It used to be that Hennes & Mauritz and Forever 21 were the only competition for Target, but now other chain stores have picked up on their cheap-chic clothing styles. Now Kohl’s, JC Penney, and even Wal-Mart have begun to copy their style. Another issue facing them is the same activists that have been going after Wal-Mart for their “bad behavior” are now (pun intended) targeting Target. In order to change the trend, Target needs to pick up the pace and create a new and exciting experience for customers and shareholders.
14 percent this year. Many are noticing that the employees at Target are not as happy as one would expect, and many comparisons of the wages and benefits of employees are almost identical to rival Wal-Mart. Target used to be known as a leader in cheap-chic clothing. Now, the cheap-chic idea that Target had started is being copied by other stores as well. As the economy tightened, people left Target for Wal-Mart. Wal-Mart has low prices. That’s about it. Their service sucks, their employees are unhappy, and for the most part, low prices is the only thing they offer. As the economy tightened up, Target was no longer the go-to store. It was predicted by Wall Street that after the economy rose, people would go back to Target, but this has yet to happen. Consumers are still shopping at Wal-Mart. Fewer stores are being opened lately by Target. In order to boost sales from less stores opening, groceries have become part of the product lineup. Target also offers 5% off of purchases when using their credit or debit cards. Although this creates revenue and increases the amount that a customer spends, it hurts the bottom line. Once you take out the low-margin groceries and the 5% discount, Target and Wal-Mart report having very similar same-store sales growth: about a 1% increase. Target may be doing away with its 5% discount soon. In order to buy more stock and pay down debt, Target plans to sell the credit-card division. Similar to Wal-Mart, Target only receives 2 percent of its revenue from online services. Target recently received their website back from Amazon in August. As soon as the website changed hands, the website wasn’t even working properly. Ironically, the link that stated “learn all about what’s new” didn’t even work. Earlier in September, Target’s website crashed when a massive response for a new line of products were more than expected. Target executives are still looking up for the second half of the year. Target executives pointed out a 4 percent jump in same-store sales in August and plan to open small-format stores in both the US and Canada and are hoping to improve e-commerce. By making these adjustments, they hope to improve revenue 48 percent and to $100 billion by 2017. There are a few other issues facing Target. It used to be that Hennes & Mauritz and Forever 21 were the only competition for Target, but now other chain stores have picked up on their cheap-chic clothing styles. Now Kohl’s, JC Penney, and even Wal-Mart have begun to copy their style. Another issue facing them is the same activists that have been going after Wal-Mart for their “bad behavior” are now (pun intended) targeting Target. In order to change the trend, Target needs to pick up the pace and create a new and exciting experience for customers and shareholders.