Target faces identity crisis
NEW YORK — Target is having an identity crisis.
The nation’s third largest retailer was once high-flying, but now it’s struggling to find its place in the minds of American shoppers.
Once known for its cheap chic fashions and home accessories, Target faces competition from trendy chains like H&M. The discounter also hasn’t been able to ditch the image that its prices on staples like milk are higher than rivals like Walmart. And it’s battling the fallout from a massive data breach that has hurt its reputation.
Meanwhile, Target on Tuesday fired the president of its Canadian operations following some missteps in that country. The ousting comes two weeks after the Minneapolis-based discounter announced it was looking for a new leader after the abrupt departure of its CEO.
All of Target’s challenges come as the broader retail industry is dealing with a slow economic recovery that hasn’t benefited all Americans equally.
As a result, Target reported its first annual profit decline in its latest fiscal year in five years. Target’s first-quarter results, which are slated to be released Wednesday, will offer more insight. And its shares have fallen 10.5 percent this year.
Here’s a look at two big issues Target faces:
Cheap Chic StrategyTarget was the first low-price retailer to team with designers to create affordable lines when it forged a partnership with Michael Graves in the late 1990s. But that niche has been copied by traditional stores and foreign imports like H&M. Analysts say Target took its eye off the ball on its trendy offerings when it focused on expanding its food business since the recession.
SolutionTarget says it’s moving more quickly to test the latest items in stores. It also made some personnel changes Tuesday that are aimed at making it more nimble. “We’re getting back to what we were known for,” said John Mulligan, Target’s chief financial officer and interim CEO said.
Price ProblemSince the economic downturn, Target has battled the perception among tight-fisted shoppers that its prices are too high when. That challenge only increased as Walmart, the world’s largest retailer, has pushed its lower prices even more lately.According to a pricing survey conducted in January by Kantar Retail, a retail consultancy, Target’s prices on an overall basket of more than 40 nationally branded groceries like health and beauty items were nearly 4 percent more expensive than Walmart.
SolutionTarget has been pushing the “Pay less” part of its advertising slogan “Expect More, Pay Less.” Last year, it touted prices on products in holiday TV ads, the first time it had done so in at least a decade.
