Target Corporation Operational Performance, Essay Example

“Target’s broad product portfolio, massive distribution network, global procurement strategy and wide network of store presence have contributed to its strong market presence in the US. The company’s large size and vast resources allow it many benefits: cost reductions through economies of scale and a strong brand image that allows it to introduce high-margin private label brands. Target’s strong market presence enhances its bargaining power and brand image. In addition, Target’s strong market position owing to its global supply chain has helped it gain a competitive edge. However, increasing competition due to industry consolidation and new larger entrants could affect Target’s margins and market share” (Target Corporation SWOT Analysis, 2008, p.5).

“Target’s broad product portfolio, massive distribution network, global procurement strategy and wide network of store presence have contributed to its strong market presence in the Target has 1,613 stores in 47 US states including about 1,395 Target general merchandise stores and approximately 218 SuperTarget Stores.Target’s strong market position is largely a result of its robust sourcing and distribution network. Target’s global sourcing network enables it to offer products at very competitive prices and survive the competitive pricing pressure of Wal-Mart. The company’s Associated Merchandising Corporation (AMC) is in charge of its global sourcing network. In 2003, AMC created Target Sourcing Services (TSS), a division dedicated to sourcing merchandise for Target, Marshall Field’s, Mervyn’s stores and Target.com. The company’s global procurement initiative has helped it establish presence in 40 countries worldwide including low cost sourcing countries like India and Pakistan. In addition, Target also directly imports approximately 30% of the merchandise offered for sale in Target stores” (Target Corporation SWOT Analysis, 2008, p.5).

“A strong distribution network in the US supports the company’s global sourcing network. Target’s merchandise is distributed through a network of 26 regional distribution centers and four import warehouses.  The company also distributes some select food items through third parties. Merchandise sold through Target.com are delivered either through its distribution center in Minnesota, or through third parties or shipped directly from vendors. This distribution network reinforces Target’s ability to offer products at competitive prices.Target’s strong market presence enhances its bargaining power and brand image. In addition, Target’s strong market position owing to its global supply chain has helped it gain a competitive edge” (Target Corporation SWOT Analysis, 2008, p.6).

“Target Corporation (Target) is a retailer which operates large format general merchandise and food discount stores. Being one of the leading retailers in the US, Target enjoys a strong market position which further enhances its market penetration opportunities and adds to its bargaining power.  However, a prolonged economic slowdown in the US would impact the consumer’s discretionary spending capacity and in turn affect the demand for Target’s products  adversely” (Target Corporation SWOT Analysis, 2009, p.5).

“Target enjoys strong brand value in the US. With a brand value of $17.1 million in 2009, Target is ranked fourth among the top twenty US retail brands. Target spends roughly $1 billion a year on advertising, well above that of its biggest competitor, Wal-Mart. According to industry reports, Target’s “bullseye” logo is recognized by 96% of Americans. Target has positioned itself as a provider of quality products at competitive prices—which is reflected in its slogan of “Expect More. Pay Less.” By virtue of its strong brand value, Target has a loyal and satisfied shopper base and scores high on the American Customer Satisfaction Index. The company has harnessed its brand potential to attract more customers, thereby strengthening its bargaining power.  Target has a balanced brand mix, comprising national and licensed brands as well as private-labelbrands. While a significant portion of the company’s sales is from nationa brand merchandise, it sells merchandise under private-label brands including, Archer Farms, Boots & Barkley, Durabuilt, Embark, Gilligan & O’Malley, Home and Bullseye Design, Kaori, Playwonder, ProSpirit and Xhilaration.  In addition, Target sells merchandise under licensed brands such as C9 by Champion, Converse, Chefmate, Cherokee, Eddie Bauer, Isaac Mizrahi for Target, Liz Lange for Target, Michael Graves Design, Perfect Pieces by Victoria Hagan, Smith & Hawken, Sonia Kashuk, Thomas O’Brien, Waverly and Woolrich, among others. A balanced mix of brands provides various revenue streams for the company and also enables it to attract a wide customer base” (Target Corporation SWOT Analysis, 2009, p.5-6).

“Target Corporation (Target) is a retailer which operates large format general merchandise and food discount stores. Being one of the leading retailers in the US, Target enjoys a strong market position which further enhances its market penetration opportunities and adds to its bargaining power.  However, a prolonged economic recession in the US would impact the consumer’s discretionary spending capacity and in turn affect the demand for Target’s products adversely” (Target Corporation SWOT Analysis, 2009, p.5).

“Target enjoys strong brand value in the US. With a brand value of $17.1 million in 2009, Target is ranked fourth among the top twenty US retail brands. Target spends roughly $1 billion a year on advertising, well above that of its biggest competitor, Wal-Mart. According to industry reports, Target’s “bullseye” logo is recognized by 96% of Americans. Target has positioned itself as a provider of quality products at competitive prices—which is reflected in its slogan of “Expect More. Pay Less.” By virtue of its strong brand value, Target has a loyal and satisfied shopper base and scores high on the American Customer Satisfaction Index. The company has harnessed its brand potential to attract more customers, thereby strengthening its bargaining power” (Target Corporation SWOT Analysis, 2009, p.5).

“Target has a balanced brand mix, comprising national and licensed brands as well as private-label brands. While a significant portion of the company’s sales is from national brand merchandise, it sells merchandise under private-label brands including, Archer Farms, Boots & Barkley, Durabuilt, Embark, Gilligan & O’Malley, Home and Bullseye Design, Kaori, Playwonder, ProSpirit and Xhilaration.  In addition, Target sells merchandise under licensed brands such as C9 by Champion, Converse, Chefmate, Cherokee, Eddie Bauer, Isaac Mizrahi for Target, Liz Lange for Target, Michael Graves Design, Perfect Pieces by Victoria Hagan, Smith & Hawken, Sonia Kashuk, Thomas O’Brien, Waverly and Woolrich, among others. A balanced mix of brands provides various revenue streams for the company and also enables it to attract a wide customer base” (Target Corporation SWOT Analysis, 2009, p.5-6).

“Target Corporation (Target) is a retailer which operates large format general merchandise and food discount stores. Being one of the leading retailers in the US, Target enjoys a strong market position which further enhances its market penetration opportunities and adds to its bargaining power.  However, a prolonged economic recession in the US would impact the consumer’s discretionary spending capacity and in turn affect the demand for Target’s products adversely” (Target Corporation SWOT Analysis, 2009, p.5).

“With nearly 90 years of worldwide trading experience, Target has developed strong global sourcing capabilities.Target’s sourcing capabilities lie in Associated Merchandising Corporation (AMC) which became a part of Target in 1998; it was established in 1918 in the US to provide American retailers assistance in buying, policy making and planning. AMC established global operations in the 1920s for importing merchandise from international markets. AMC, and its worldwide sourcing network, was acquired by Target in 1998 to assist the latter in sourcing merchandise at competitive prices through AMC’s global network. AMC was rechristened Target Sourcing Services/AMC; today, it is central to Target’s sourcing strategy” (Target Corporation SWOT Analysis, 2009, p.6).

“Target has established relationships with local vendors around the world and understands indigenous policies and business practices that influence the production of goods. The company’s product management team influences all phases of product production—from concept to on-time delivery of each shipment.Target sources merchandise without involving wholesalers or trading companies—a strategy which has substantially reduced operating costs for Target. Target’s international sourcing operations have 34 office locations in 24 countries. The company brings products into the US from more than 80 countries around the world. Strong supply chain capabilities have enabled Target to manage its operations efficiently, thereby maximizing profitability” (Target Corporation SWOT Analysis, 2009, p.6).

“Target is the one of the leading retailers in the US. In 2009, the company was ranked 28 among the Fortune 500 and was amongst the Standard and Poor’s 500 companies. As of January 2009, the company operated 1,682 general merchandise and food discount stores with about 1,443 Target general merchandise stores and 239 SuperTarget stores spread across 48 US states. The stores comprise a total of approximately 222,588 square feet. Additionally, the company operates 34 distribution centers. A strong market position enhances Target’s market penetration and adds to its bargaining power” (Target Corporation SWOT Analysis, 2009, p.6).

“Target recently recalled several products, reflecting a weakness in the company’s product management operations. Most recently, in May 2009, Target voluntarily recalled a hooded pink jacket (for girls).The recall was made after it was identified that when the jacket is opened, the zipper pull may detach from the top, causing a potential ingestion hazard” (Target Corporation SWOT Analysis, 2009, p.6).

“In February 2009, the company recalled 100,000 units of Safety 1st SmartLight Stair Gates. The recall was made after it was discovered that the hinges that hold the stair gate in place could break, posing a fall hazard to children. In the same month, several of Target archer farm and  Target market pantry products that contained peanuts were recalled because of a potential contamination with Salmonella.  Again in January 2009, the company recalled about 200,000 units of Rainforest Portable Play Yards as it could pose a fall or entrapment hazard to young children. A significant number of complaints related to the play yards have been reported” (Target Corporation SWOT Analysis, 2009, p.7).

“Mervyn’s is a promotional, middle-market neighborhood department store, based in the San Francisco Bay Area. The typical customer is a 25- to 44-year-old female who is married with children, working outside the home.  She is of a moderate income level and has some college education. Of the 267 stores in the chain, almost half are located in California (with about twice the number of stores in the greater Los Angeles/San Diego area than in the Bay Area), although Texas accounts for a large proportion as well (see Exhibit 4). With the growing Hispanic population in these areas, Mervyn’s has been tailoring some initiatives to focus on this group. Target owns 59% of the Mervyn’s locations, leases 23% and owns the building but leasesleases the land on the remaining 18%. The division has 21.6 million retail square feet, with stores ranging from 60,000 to 167,000 square feet (the average size is 81,000 square feet). Mervyn’s focus is on fashion, service and value for its targeted customer, primarily in apparel and home décor. Approximately 70% of sales are national brands, including Adidas, Cuisinart, Levi’s, Nike, Nine & Company, Samsonite and Van Heusen” (Kozloff & Gordon, 2004, p.6).

References

Target Corporation SWOT Analysis. Target Corporation SWOT Analysis, Jun 2008, p.1, p.11. Retrieved April 30, 2010, from Business Source Complete database.

Datamonitor: Target Corporation. Target Corporation SWOT Analysis, Feb 2009, p.1-9, p.9. Retrieved April 30, 2010, from Business Source Complete database.

Datamonitor: Target Corporation. Target Corporation SWOT Analysis, May 2009, p.1-9, p.9. Retrieved April 2010, from Business Source Complete database.

Datamonitor: Target Corporation. Target Corporation SWOT Analysis, Jul 2009, p.1-9, p.9. Retrieved April 30, 2010, from Business Source Complete database.

Kozloff, E. P. & Gordon, I. J. (2004). Target Corporation: Mervyn’s and Marshall Field’s – Time to Let Go?  White Book, p.1-43. Retrieved April 30, 2010, from Business Source Complete database.