Target has a plan to end the Christmas sales madness

Source: Target
Oct 24, 2017

The 2016 Christmas selling season was a disappointment for Target with same-store sales declining 1.3 percent. The retailer isn’t looking to repeat the same mistakes.

Last year, Target focused heavily on promotions, including 10 days of deals around the Black Friday weekend. In the end, management concluded that the frequency and number of deals offered only watered down the effectiveness of its marketing. This year, Target heads into the holidays with a simpler plan that combines lower everyday prices, new private label lines, curated gift selections and a more focused promotional schedule.

The recent move by Target to lower everyday prices on products across its stores has helped set the stage to curtail promotional offers. The chain has also been engaged in an aggressive store remodeling program in locations across the country to improve the shopping experience.

Mark Tritton, chief merchandising officer for Target, told reporters at a briefing last week that the retailer will start off the season strong with deals for the Black Friday to Cyber Monday. While pledging to offer “meaningful promotions” throughout the holidays, he said, “priced right daily will be our regular drumbeat.”

A key component of Target’s holiday strategy will be eight new private labels across categories, including baby, kids, men’s and women’s apparel, accessories and home. The chain recently debuted its Project 62, A New Day, Goodfellow and JoyLab lines. The Hearth & Hand with Magnolia exclusive label co-designed with Chip and Joanna Gaines will roll out on Nov. 5. The line, which features 300 products, most for less than $30, includes giftables, home décor and tabletop items.

Target has upped its omnichannel efforts with 1,400 of its 1,800 stores now set up to fulfill online orders more quickly. The retailer, as in the past, will offer free shipping with no minimum order on purchases made from its site between Nov. 1 and Dec. 23.

The retailer is also introducing GiftNow on Shoppers click on products with GiftNow buttons to send an e-gift box. The recipient can accept the gift, change the color or size, or choose something entirely different, all before anything ships. Target said the service, which covers thousands of items, is a great idea for last-minute shoppers.

DISCUSSION QUESTIONS: Does Target have the right plan in place to help grow same-store sales during the holidays? Which of its initiatives — lower everyday prices, fewer promotions, new private labels, exclusive brands, remodels or omnichannel — do you think will be most critical to the chain’s top and bottom line performance?

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25 Comments on "Target has a plan to end the Christmas sales madness"

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Mark Ryski

I think Target is on the right track with its holiday plans — whether it will deliver positive comps is yet to be seen, but the strategy is sound. Target’s approach to focusing promotional efforts to have fewer but more meaningful promotions, along with the private labels and exclusives, will deliver the most impact. Too many retailers get caught in the promotion trap by having so many competing and overlapping promotional activities that consumers get confused and the message gets lost.

Kim Garretson
4 years 6 months ago

An observation from this Minneapolis-based Target watcher. Target dumps vendor samples and unsold clearance items in local thrift stores. I am hoping Project 62 succeeds because, in my experience checking local thrift stores, the company’s last effort at a private label home line — Modern Home by Dwell — was not a big winner. And surprisingly I am already seeing a lot of Project 62 items in these stores, especially lighting items.

Charles Dimov

Lean into omnichannel! It’s good to see that they are expanding their omnichannel capabilities from 1,400 to 1,800. Right now only 29.1 percent of U.S. retailers have click and collect (BOPIS) running. So there is a big opportunity for Target here to become the go-to source for fast lock-in and pickup transactions. Many people leave holiday shopping until the last minute. When that happens, waiting for a delivery just does NOT work. Target has a chance at really capturing this market — if they do it right, and make sure their customers know about it!

Sterling Hawkins

I’m with Charles that omnichannel is what will make a difference for Target. Having easy interactions across in-store, online and fulfillment, makes for a happier customer, especially around the holidays.

Shep Hyken

The confused buyer doesn’t buy. When there are so many variables to a sale, it feels complicated. That’s stress and friction that doesn’t appeal to some shoppers. I like that Target is taking a different approach. I am not sure that just one season is indicative of what could happen the next season, but the numbers were off enough that it’s worth trying a different approach.

Phil Masiello

As we saw with J.C. Penney, it is tough to turn off or reduce promotions in favor of EDLP. During the holidays especially, consumers look for promotions to help them with their holiday shopping needs.

Target has lost a bit of its cachet in the last few years and they need to go back to what made them a strong retailer: Exclusive brands that were sold at a great value in clean and well-stocked stores. Having stores full of me-too items will just lead to price competition.

Neil Saunders

Target’s problem during holiday 2016 wasn’t simply that it relied too heavily on promotions, it was also because it did very little else to drive trade.

Stores were poorly merchandised, assortments were bland with little exclusivity, there were very few own-brand initiatives, the company made little of the convenience of omnichannel and pricing in some categories like grocery was too high.

The next result was a lackluster response from consumers, poor trade and lost market share.

Going into this holiday season, Target is on the right track! The new exclusive own-label lines have been well received and there will be some strong gift stories in brands like Goodfellow & Co. The refurbished stores are much more interesting to shop and lend themselves to exploring for gift ideas. Omnichannel is much sharper and is being used to make shopping more convenient and faster for time-pressured consumers.

It is the combination of all of these things that will help Target to a better holiday season than it had last year, even if it does cut back on promotional activity.

Art Suriano
I think what Target is doing is very innovative and should make their holiday season a good one. For starters, they are taking a position and sticking to it. That is very wise in this aggressive environment for they will stand aside of their competitors. Everyday low pricing can work for them mixed in with special promotions. The free shipping and additional omnichannel opportunities are also wise and should make Target’s holiday season successful. Retailers, as we have discussed in earlier articles, have extended the holiday season to the point that customers tune much of it out. Even now we’re seeing Toys “R” Us starting Black Friday deals October 26th. It’s too much for the consumer to give their attention. “Let’s get through Thanksgiving and enjoy that holiday and then focus on Christmas” seems to be Target’s message and I think that’s smart. I also like the Gift Now concept. It takes gift cards to the next level because too often they go unredeemed and forgotten. So I see Target’s holiday season plan being solid… Read more »
Dr. Stephen Needel

Whether their strategy will fix things may depend on why sales were down last year. If it was promotion-driven, in that they were charging less, then reducing promotions may help (although lower prices all around may offset that). If it was fewer customers online or in the stores, I’m not sure they will be doing anything different enough from the competition to make a difference.

Cynthia Holcomb

In written form this sounds like a very smart plan. Target has upped its game in apparel and accessories for the entire family. Floor sets look fresh and interesting, shying away from commodity apparel. If self-serve is the Target goal during the holiday season, then this will likely be a success. I think people respect being treated fairly, without bait-and-switch promotional tactics. Maybe the old Target is coming back as the new, refreshed Target?

Bob Amster

We are taking about profit optimization here! All the factors contribute to improved sales (and profit). EDLP weans the consumer off of costly promotions. Private label can create interest at more affordable prices with better margins. Exclusive brands, well, that speaks for itself. Omnichannel and remodels are less influential, yet still important.

Max Goldberg

Target keeps throwing ideas against the wall to see what sticks, when it should be taking care of the basics: in-stocks, customer service, speedy checkout, etc. Lower everyday prices across the store will help bring consumers into the store, but will these prices be competitive with Walmart and Amazon? Fewer promotions and greater reliance on private label could help management redefine the brand, but every time Target runs a sale they go out-of-stock the day their circular drops.

Shawn Harris
Shawn Harris
Senior Director, Global Retail and Hospitality Strategy & Business Development,
4 years 6 months ago

Keeping promotions simple, and prices more than competitive, will certainly help. However, given the shop-the-list based approach to buying that most consumers have adopted, it will be imperative that the items you say you have, and the items I expect you to have, remain stocked.

Paula Rosenblum

It may take a couple of seasons to pick up steam, but I sure hope Target stays the course. This promotional madness is useless.

Ryan Mathews

The question isn’t so much the strategy. It’s more whether or not Target is losing its brand promise. If that’s the case any merchandising strategy will be hamstrung. Moving sales to digital channels — sorry I can’t bring myself to say the “O-word” — will help the bottom line. But everyday low prices is Walmart’s brand promise. Fewer promotions puts more pressure on the remaining deals to be winners. New retailer-controlled brands — again, can’t bring myself to type the “PL-word” — may help, unless Target really does have a nascent brand problem it isn’t addressing. And exclusivity is a winner, but again only if you have curated the right exclusives.

Lyle Bunn (Ph.D. Hon)

Being “just a store” in the minds of consumers results when any retailer fails to tell its story and then deliver against it. Merchandising should express and amplify the core value proposition. Otherwise, consumers’ energies become invested in trying to determine what tactical string is being pulled today to gain attention and share of wallet. When the value message fails to clearly lead the consumer engagement discussion, the future is truly uncertain.

Brian Kelly
4 years 6 months ago

Its not the promotions, it’s the lack of traffic which comes from a brand that has lost its relevance. If the goods offered were right, the promoted price would not matter.

To me, Target remains stuck over target audience definition and that is an existential issue. In the coverage of the press conference, they said they would return to a focus on young families and then ticked off multiple other segments they intend to target.

Like Shep said, “a confused buyer doesn’t buy.”

In the absence of clarity around target definition, the entire selling model is at risk. Product, promo, place, service and yes price are all challenged and, like last year, less intuitively relevant. Sale is just one message in the mix.

Camille P. Schuster, PhD.

This plan sounds sensible. The everyday low prices help those who shop early. The Black Friday weekend pricing helps those who like to start the Christmas season on Black Friday. The new private-label products provide distinctive gifts that can not be purchased anywhere else. This seems better than last year’s plan.

Gary White
4 years 6 months ago

I am a past executive of Target, with 20 years of experiencing; old, new, old, new and old again at Target. From my point of view the idea is correct. They don’t need to be the lowest price, just a competitive fair price. Being focused on interesting product (Cat & Jack), in a well maintained space (in-stock and well-presented), will go a very long way to gaining positive comps and greater margins. The only issue is, why wait until November to execute and practice this plan? It takes time for customers to get the rhythm of a specific retailer. We at Target executed this less promotion and more newness approach 15 months out, with soft sales in the beginning and our best and most profitable growth in history for the next seven years.

Hang in there, Target. You can do it.

Doug Garnett
Doug Garnett
President, Protonik
4 years 6 months ago

These sounds like smart moves for Target — getting better control of prices, products and promotions.

But will it improve store comps? Given the complex relation between store presence and online sales, the better question is whether store comps are still meaningful.

Presence of a store in a market increases online sales from that area. Fluid, simple online ordering often decreases store sales in an area – although many online sales result from store visits.

Sadly, Wall Street obsesses about store comps because they’ve been trained to. But it’s time to shift metrics to find better ways to look at overall health of a retailer.

Craig Sundstrom

I don’t think the real question is “whether they will grow same sales” because if they don’t, they will essentially be falling into a GAP like pattern of death by atrophy. The real question is by how much: if they grow ~ 1-2% they will essentially be where they were two years ago (and accounting for inflation actually worse); so they really need 3-5% to be IMHO, “healthy.” That seems like a tall order.

Sarah Nochimowski

I really like the giftnow approach, I think it is really fresh and original. It should help a lot in their holiday sales.

Jett McCandless

Their omnichannel plan is particularly interesting. I still think the main reason they saw a decline last Holiday season was the shift towards ecommerce. They weren’t ready for ecommerce to take center stage during the busy season, and it bit them. While having their stores ready for fulfillment is huge, and short shipping times with free shipping is necessary to compete with Amazon, it will still come down to whether or not people use their services.

Min-Jee Hwang

Shoppers love meaningful promotions and free shipping, so I know these two parts of the Target plan will be successful. Everyday lower prices will drive sales for necessities and targeted promotions on hot items could boost sales for gifts. They’re hitting many of the major areas that shoppers require: good prices, efficient and free shipping, and exciting new products.

Seth Nagle

For a big box retailer like Target keeping it simple for its shoppers is paramount to their success. As mentioned, some of the deals they ran last year were too complex and you almost needed to pull out a day planner to plan your shopping trips. Also, it’s not just Target, a lot of retailers are guilty of this.

The idea of launching a new private brand with 300 items with a price range mostly under $30 is a great idea. Target’s private label doesn’t have the same stigma as private label in grocery and as everyone is trying to stretch their dollar this will help.

Lastly, I think this year will be the real test for retailers to deliver on the omnichannel experience. The technology is there, retailers have had time to work out any issues and now it’s time to move ahead full speed.


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