The current state of the economy has consumers looking to save money. They know they can save at Walmart and the retailer has seen its same-store sales climb even as the economy has headed in the other direction. At rival Target stores, however, sales have been decidedly less than Target-like. Shoppers, a Reuters report suggests, have identified with the "Expect More" portion of the chain's tagline. What they have not bought into is the second half of that message that promises they will "Pay Less."
Recently, Target has begun to emphasize its discounter heritage more in its marketing with television ads, online and direct mail efforts promising consumers savings.
Industry analysts say that price checks show that Target is competitive with Walmart on similar product pricing but that consumers have attached themselves more to the chic than cheap portion of the chain's value proposition.
"When economic times get hard and the business model is under strain, you need to find a way to refine your advertising to actually make it work harder, and I don't think they have yet," Zain Raj, chief executive of loyalty marketing firm Euro RSCG Discovery, told Reuters.
Target's core middle-income consumer is looking for deals as disposable dollars get eaten up by higher fuel and food prices. The same shoppers, experts suggest, are less interested in getting a good deal on a new clothing item and prefer to save on the laundry detergent they use to clean the garments they already own.
Jeannine Befidi, a spokesperson for Target, said the company is emphasizing categories such as food and pharmacy over apparel to increase shopping frequency. That doesn't mean, she said, that the company plans "to change what we consider to be a proven, successful long-term strategy."
Ms. Befidi said Target is looking to strike the "appropriate balance" between "Expect More" and "Pay Less."
Joseph Feldman, a retail analyst at Telsey Advisory Group, told Reuters that Target needed to "change with the times" and do more "creative marketing and merchandising to convince the customers that prices are the same [as] Walmart."
Shelli Baltman, head of customer experience innovation at consulting firm What If, told the news service, "Walmart's done a really good job of letting customers know that they understand what it's like to tighten their belt."
Target, she added, needs to let its "customers know that we understand your suffering, and we are going to help you."
Discussion Questions: If Target's prices are comparable to Walmart's then why is it that so few consumers seem to know? What does the company need to do to communicate that message? Does it need to set aside its chic image to accomplish this messaging goal?