Aggressive toy promotions push Target ahead

Discount Store News, Dec 14, 1987

Aggressive Toy Promotions Push Target Ahead

Target's ability to pull in customers from all types of markets through its aggressive toy promotions gives it an edge over K mart and Wal-Mart in this category, said industry spurces.

Target is called the "promotional horse" in the toy industry. Its aggressive promotional efforts in toys are noted quite often as one of the chain's major strengths.

Target differs from the other two discount giants in the way it buys and stocks toy departments to meet its customers' needs.

Core of Basics

Wal-Mart and K mart try to be consistent by stocking a core of good solid basic items with price points, theme and variety to appeal to the day-in, day-out customer. Then in the fourth quarter, both add a limited selection of good volume toys such as television-promoted toys and licensed products to their basic assortment.

Target, on the other hand, goes after the upscale customer by changing its toy assortment dramatically in spring and in fall with two totally different planograms for those time periods. It expands a great deal in the fall with higher price point sku's and develops a strong endcap program for the Christmas season. It offers seasonally a wider variety of sku's to the consumer than K mart and Wal-Mart.

While Target may not actually always have the lowest prices on all toys sold when compared to Wal-Mart and K mart, it has the uncanny skill to convince customers through its advertising that without a doubt it has the dirt bottom prices.

And, promotion is the nature of the toy business, especially with the highly-advertised toys that all three chains carry. Other more basic toys leave room for more margin for retailers.

Target pushes promotional toys more than the other two discounters. During this Christmas season, it has endcaps filled with such promotional toys as the Fisher-Price Fun with Food series, Hasbro's Pogo Bal and Coleco's talking Alf doll. Endcaps at K mart and Wal-Mart include more basic toys such as the popular board game Pictionary and Lego building sets.

DSN research found Target to have the lowest price on selected toys in selected markets about half of the time. Other times, the chain was beat by either one or both of the other two discount giants.

For example, in a recent price comparison study between the three chains, Target had the lowest price on Worlds of Wonder Lazer Tag game set in both Memphis, Tenn., and Wichita, Kan., and was only slightly higher than Wal-Mart in the Austin, Tex., market.

In Wichita, Target was lowest in price on other promotional toys such as Ideal's talking Big Bird ($54.99 at Target, $59.76 at Wal-Mart and $69.94 at K mart) and on a basic toy, Fisher-Price Little People/ Little Mart ($11.99 at Target, $13.94 at Wal-Mart, $13.96 at K mart).

However, in other instances, the chain had the highest price on both promotional and basic products. Target had the highest price in four markets on the Hasbro's Pogo Bal and the highest price in two markets on the Fisher-Price Farm Set.

Still, Target customers buy more toys in than customers of the other two chains.

According to consumer research conducted for DSN by Leo J. Shapiro & Associates, Chicago, a higher percentage of Target customers said they went to that store mainly to buy toys, than did customers of K mart or Wal-Mart.

And surprisingly, Target led by a wide margin in non-metro rural markets, where Wal-Mart is usually more dominant.

Since few Target stores are located in such areas, this research finding probably indicates that many non-metro area consumers are driving to the city to buy toys at Target, rather than going to the closer Wal-Mart.

However, while Target customers may say they spent more money on toys than many other categories in the store, Wal-Mart's toy department received a higher customer approval rating.

The research further showed that Wal-Mart's toy department is rated stronger when it is alone in a market than when it shares a market with a K mart or Target store.

On the other hand, Target customers gave the chain's toy department higher marks when they live in markets that also contain K mart or Wal-Mart stores than when Target is not competing against one of the other big discounters.

K mart's toy department was rated similarly regardless of the degree of competition in the market.

All three chains seemed equally stocked on more basic toys such as board games and preschool items, which could be a result of the popularity of basics toys outweighing promotional toys this year.

Target has the largest toy department in terms of floor space, followed by Wal-Mart and then K mart, which seems to have the smallest toy department of the three chains.

In bicycles, Wal-Mart upgraded its display two years ago to a display rack that carries up to 30 bicycles per store. Target, in contrast, typically carries 40 to 50 bicycles on floor racks as well as hanging from the ceiling.

All three chanins seem about equal in price points and selection on the lower end of bicycles, starting at $49 to $59. Target and K mart have higher price points of up to $200 while the highest priced bicycle at Wal-Mart is just a little over $100.