Why Is Target So Cool? - Target's marketing strategy - Brief Article

DSN Retailing Today, April 2, 2001 by Jeffrey Arlen

The term "hip discounter" may seem an oxymoron, but through the use of extraordinary merchandising and marketing, Target Stores proves that this phrase isn't necessarily a contradiction in terms. Outrageous, whimsical advertising on TV and in tony periodicals push Target's marketing message. In magazines such as Vanity Fair and The New York Times Magazine, print expressions featuring models in stylish garb surrounded by hyper-lucid images of everyday commodities vie for position with the likes of Nautica, Lancome and Saks Fifth Avenue. This clearly positions Target in an alternative realm from its more conventional mass-market competitors.

Target's marketing may push edginess further than the in-store experience, but the company's displays and content certainly support this perspective. A visitor--"guest" in Target's corporate lingo--entering a typical location is all but assaulted by vivid colors, clearly defined merchandise statements, in-store branding assertions, wavy neon and outsized pop art photographs of consumer products. Supersized graphics depicting common household items like Bounty towels and Colgate toothpaste decorate the walls of Target's housewares department like works of modern art. They announce brand positioning even as they manage--because of their gigantic size, clarity and perspective--to say something about our culture.

Without Andy Warhol, could Target Stores exist as it is today? Have ceo Bob Ulrich and his team of retailing alchemists learned the secret of turning the mundane into the sublime?

It would be pure hyperbole to suggest that Target's use of artful images and its ability to merchandise in a theatrical manner is unprecedented. Decades ago, Bloomingdale's created a mystique--including its famous tagline, "like no other store in the world"--that separated it from other department stores. Its 59th Street unit became the Globe Theatre of retail, staging productions that attracted royalty (Queen Elizabeth stopped at Bloomingdale's on a trip to the States) and helped turn designers like Ralph Lauren and Donna Karan into the mercantile equivalent of movie stars.

Bloomingdale's former chairman and ceo, Marvin Traub, who is largely responsible for creating the modern Bloomingdale's, gives Target's executives credit for their differentiating strategy.

"Clearly there is a certain drive to be creative. They see ways of doing business that are based on taste and ideas, not just price. Doing that is even more difficult today than in the past because of all of the pressure to perform on both a long and short-term basis by Wall Street. That Target has been able to proceed the way it has speaks to the company's creativity and vision," says Traub, who currently sits on several corporate boards and runs his own consulting company.

"It's strategic smarts that you don't often see in retailing," explains Candace Corlett, a partner at WSL Strategic Retail. "Target knows that going head-to-head on price won't work when you are competing in the marketplace. Our focus groups show that American shopping is based on a combination of function and emotion. The Target group obviously said 'we are going to lay on an emotional layer,' and that edgy piece, which by the way isn't too far out there, creates a trendy, yet safe, experience. As a result, the store is able to attract all kinds of apparel shoppers--affluent, middle and low-income people. Target Stores doesn't just appeal to a single demographic."

Apparel merchants at the chain, which will grow to 1,000 units by year's end, work closely with store-level personnel to diligently showcase trend. This gives the operation, which in the latest fiscal year produced sales of $29.3 billion, an enormous advantage over many of its competitors.

"From a merchandising point of view, Target has always been more trend conscious than most in the discount trade. But it goes beyond that. Like Kohl's, Target stores are very easy to shop because they are well laid out. And, because of support in store, Target gets credit for being on trend, unlike some discounters that may have the right looks but fail to display them in ways that make their customers notice," says an apparel business veteran, who for years worked at one of Target's competitors.

Target's commitment to trend and to unique merchandise extends far beyond clothing, which in turn helps position the retailer's apparel as desirable. Michael Graves' housewares lines give validity to Target's Xhilaration and Cherokee assortments.

In addition, the store's approach gives it the opportunity to showcase and market house brands that would not easily fit in with the assortments of competitors. Kmart has Jaclyn Smith and Kathy Ireland; Wal-Mart has Kathie Lee. Target's latest branding initiative involves licensing the Mossimo moniker. Before a slew of financial problems drove Mossimo Giannuli from the marketplace, his signature collection was positioned as upscale, cutting-edge surfwear.

Target's choice of Mossimo for the masses is entirely in keeping with a store whose name--in tongue-and-cheek fashion--is often pronounced "Tarjay" as if it were the province of a chic French designer. And the Mossimo merchandise, which rolled out this spring, has initially sold better than plan despite the slump that retailing as a whole is currently experiencing.