Revamped CE vies for quality, upscale niche - Target's consumer electronics department

Discount Store News, April 5, 1993

Unlike the two departments that define Target, apparel and home fashions, the chain's commitment to consumer electronics seems to turn on and off. Former buyers remember a Target that was, in the early '80s, the No. 1 retailer of blank videotape in the world (with 6% of the total U.S. market when Target operated only 200 stores). At the same time, Target introduced innovations that are now industry standards; headphone cassette players in clampacks, for instance.

In the intervening years, though, Target's attention to the category has waxed and waned. Now, in the '90s, Target's interest in CE again seems to be on the rise. Target is "trying to attract the upscale audience that is bailing out of the department stores, and their strategy is to offer a selection that will attract that shopper," a vendor said.

Two years ago, the company's home products divisional vice president, Bob Guelich, noted that "the time isn't right for us to get into the computer market. We'll continue to test the category, but we don't think it's our business yet." Today, it looks at if the company feels the time is right, because Target has rolled out a full selection of entertainment and productivity software, bulked up its computer media and accessories selection, and continues to test various configurations of PCs in most of its larger stores, particularly the 11 new Chicago area Greatlands.

The DSN consumer survey in Columbus, Ohio, suggests that the moves are important, especially for stores in new markets, such as Chicago.

Only 1% of shoppers surveyed named Target or Greatland as their first or second choice for buying consumer electronics. That compares with 67% who mentioned Sun TV, a dominant specialty chain in Columbus.

Among just consumers who named a discount department store, Target fared better but still lagged far behind Kmart and Meijer. Of shoppers who named a discount store as their first or second choice, 11% named Target or Greatland. In contrast, 48% named Meijer and 47% mentioned Kmart, both long established in Columbus.

The software selection is home-user oriented, and ranges from children's programs (mainly Disney titles like Beauty & the Beast Print Kit) to relatively easy-to-use finance programs like Intuit's Quicken, with several adult and children's games tossed into the mix. Target features on endcap a large selection of discontinued titles from major vendors like Spinnaker, Virgin and Accolade. Similar to "cut-out" CDs and records, the software sells for $5.

Titles are about evenly divided between IBM and Windows formats; there are no Mac titles to date. A Target executive said that the discounter is still experimenting with software, trying to decide, for instance, if its customer really wants or expects to find business software on the chain's shelves and how much of a selection is necessary to be in the business.

Accessories and diskettes are Target's forte to date, with its presentation and depth almost up to office superstore standards. The highlight of this high-margin department is a full presentation of the Memorex line of computer accessories, including storage cases, surge protectors, antistatic pads and other similar products. In diskettes, the company merchandises Sony, Maxell, BASF and Verbatim products.

"Target s one of the best at merchandising this category," said Verbatim's Bob Falco. "They're really ahead of the pack in the general merchandise category." He compares Target, favorably, to Best Buy and Circuit City as a premier retailer of computer accessories.

Fred Peterson, director of sales and marketing, Memorex Computer Supplies, said that Target was exhibited a long-term dedication to the accessories category. "They're grown their mix from eight skus to 26, and are going up to 40," he said. "We've had very good communication with them; sometimes we suggest a new product, sometimes they approach us to develop something that they think fills a need."

In addition to standard supplies like storage cases and diskettes, Memorex now produces a mouse and trackball, as well as a series of instructional video tapes that are finding their way onto Target shelves.

In cameras, Target plans to expand its offerings for the entry-level kid's market, including a line of starter kits from St. Louis-based Kalimar. They will include a $19.99 promotional model that combines a 35mm camera with binoculars.

It stocks a Target private label One Shot single-use camera, $5.99, including the 24-exposure roll of color film. Its lowest price point for a 35mm camera is the Vivitar Fun Camera at $14.99.

Its highest price point is an Olympus camera, with a permanent, 38mm to 110mm zoom lens, at $269.99.

In Wisconsin stores, Target dropped SLR cameras two years ago, although Atlanta stores are still carrying two skus of Minolta SLRs in the $400 to $500 range. But the Chicago Greatlands offer none. Instead, they concentrate on the $100 point and shoot category. They offer, for example, a Minolta, auto-focus, with 70mm zoom lens, at $159.99.