Target Corp. has certainly come a long way with its e-commerce efforts. Two years ago, the company’s website couldn’t even properly process orders following the roll out of its Missoni collection.
Fast forward to 2013. As of the first week of November, all 1,800 of Target’s stores in the United State offer consumers the ability pick up merchandise in the store that they had ordered online.
Buy Online, Pick Up in Store is not exactly new: Best Buy and Macy’s have long offered the service. But given its ambitious timetable—CEO Gregg Steinhafel told analysts during the summer the retailer planned to complete the roll out by Black Friday—Target not only finished the job but finished it a good three weeks early.
Amy Koo, a retail analyst at Kantar Retail, expressed skepticism that Target could complete the project in such tight timeframe. But the company seems to have adopted a more cautious approach to the rollout, she said.
Unlike the launch of the redesigned Target.com in 2011, the retailer has not heavily publicized the debut of Buy Online, Pick Up in Store. Back then, critics argued that Target did not adequately test its website to see if it could handle all of the heavy traffic the Missoni collection was bound to attract.
This time though, Target opted for a “soft launch” to first the test the service on employees and some customers.
“Target did not make a big splash, which makes it easier for them to first get the hang of it ,” Koo said. “It’s a real good thing to ease into it rather than make a big blowout statement.”
Even now, the service remains rather low key. Koo said a store she recently visited was only filling 10 to 15 orders a day.
Target is apparently still working out the bugs. A good friend in San Francisco recently complained to this blogger that the item she ordered on the website was not set aside for her when she visited the store.
“Target made up for it though by helping me find the items and helping me wheel them to my car,” she said.
Target Corp. CEO Gregg Steinhafel acknowledges that the retailer suffers from a “price perception” problem in Canada. Consumers readily buy Target’s “discretionary” merchandise like clothes and home.
But when it comes to “non discretionary” items – such as food and healthcare – shoppers assume Target’s prices are much higher than that of Wal-Mart or Loblaws.
For that reason, Target’s Canadian sales have fallen below the company’s original projections. Still, the company’s price perception woes are not exclusive to Canadians.
Over the past three years, Target has struggled with weak U.S. sales during the crucial holiday shopping period. Part of Target’s problem is that the company has not cut prices as aggressively as its competitors, analysts say. Holiday is largely about discounting, but Target has refused to chase what it calls “temporary market share” at the expense of profit margins.
In any case, Target’s prices are probably not materially more expensive than rivals. The company already offers 5 percent off each individual purchase with a REDcard. And Target recently decided to match online and in-store prices of competitors like Wal-Mart and Best Buy, and offer free shipping.
“There isn’t going to be a meaningful change in our [holiday] strategy, because day-in and day ... our prices are competitive,” Steinhafel told analysts during a recent conference call. “We have a very strong value proposition and our circular pricing is even more aggressive than that and we take market leading positions.”
But perception doesn’t always match reality. Target’s prices may be competitive, but Americans looking for deals will likely assume Wal-Mart and Amazon have lower prices, analysts say.
“For the last three holiday seasons, [Target] has performed poorly,” Daniel Binder, a retail analyst with Jefferies & Co., wrote in a recent research note. “This appears to reflect its less aggressive pricing message even as its everyday low prices competitive.”
“We do remain concerned that its less aggressive promotional posture during the biggest quarter may contribute to a loss of mind share with its core customers,” Binder wrote.
In other words, for all of its marketing prowess, Target doesn’t effectively communicate to consumers its holiday prices are just as good if not better than everyone else’s.
To address soft sales in Canada, Steinhafel promised to take quick action to educate consumers.
“We’re going to make sure that our prices get more notice than they have been up to this point,” Steinhafel said. “Part of that was a conscious plan on our part to make sure that we really won in home and apparel and we feel real good about where we’re in those two businesses today, so we’re proud of that fact.”
“Now we have to just turn on the gas a little bit on the other side of the equation to make sure that we’re getting the Canadian guest to understand what great values we offer,” he said.
Steinhafel could easily apply that same logic to American consumers come November and December.
In Chicago, where baseball loyalties are divided between the Cubs (North Side) and the White Sox (South Side), Target Corp. has decidedly pledged its allegiance to the Cubs.
Or has it?
Target enjoys a multi-year marketing deal with the Cubs to support its new CityTarget store, which includes a noticeable bull’s eye logo on the famed ivy and brick outfield in Wrigley Field.
Only one problem: the CityTarget store is technically located on the South Side.
Last year, the Minneapolis-based retailer opened the CityTarget store to much fanfare on State and Madison streets. Designed by famed architect Louis Sullivan and built in 1899, the building, which is a U.S. historic landmark, was home to the Schlesinger and Mayer department store and later Carson Pirie Scott.
But a decision by Chicago’s City Council in 1908 declared Madison street as the official dividing line between the north and south sides of the city. The store sits on the south side of Madison. If the store had opened just 100 feet across the street, Target would have safely been in Cubs territory.
Not that it really matters since there are plenty of Cubs and White Sox fans who live and work on each other’s turf. It's not as if Target would pick a building solely on the basis of baseball loyalties. And some people believe the real North/South divide belongs someplace else.
Still, Target has tried hard to position CityTarget as neighborhood stores with strong ties to the community. And a few people did notice the contradiction, said Brian Kelly, a Chicago-based retail consultant.
Right now, the CityTarget sells more Cubs merchandise than White Sox products. In any case, both teams have losing records and are unlikely to make the playoffs.
In recent months, though, the Cubs and White Sox have ceded considerable shelf space to another Chicago team: the Blackhawks of the National Hockey League, which recently won the Stanley Cup Championship.
So it seems in Chicago retail, geographic loyalties don’t matter so much as winning pedigrees.
Come July, local Target shoppers will see some store employees dressed in black in addition to the usual red and khaki.
These employees make up Target's new Beauty Concierge Service, which provides high level, unbiased beauty advice to consumers.
The program, first piloted in Chicago and since expanded to Los Angeles, will hit 36 stores in the Twin Cities region next month.
Ultimately, Target plans to equip 200 stores throughout the country with the service by the end of the year.
Neiman Marcus is wasting little time staging its Twin Cities' exit. Originally, the Texas-based retailer planned to close Jan. 31, but strong sales of its clearance merchandise have made the retailer move up the closing date to Saturday, Jan. 26 at 3 p.m., said Ginger Reeder, vice-president of corporate communications.
Another reason for the earlier closing is the huge amount of full-priced merchandise removed from the stores in the past week. One salesperson estimated that more than 60 percent of the merchandise was sent to other stores, leaving entire sections such as men's suits and jewelry looking sadly empty,
The good news for shoppers hoping to bag one more bargain during the ultimate Last Call, is that supplemental merchandise is being brought in Wednesday, Jan. 16 to fill some of the empty spaces, said Reeder. Also, all remaining merchandise already marked down 55 to 65 percent will get an additional 25 percent markdown starting Friday, although items can be put on hold now during pre-sale.
According to Reeder, closing a store is somewhat new territory for the luxury retailer. "This is our first store closing," she said. A store in Houston, Texas was razed in 2005, but that was due to the entire mall being torn down. Most of
the merchandise was simply moved to another Neiman store in Houston, she said.
Connie Hoen of Oakdale was one of about 30 customers waiting quietly in line before the doors opened on the first day of Macy's closing sale at its downtown St. Paul store. She found the storewide discounts of 20 to 40 percent "disappointing," She was carrying around a Fitz & Floyd giftware set but wasn't sure if she would keep it. "I don't know what the discount percentage is," she said.
Early Monday morning, many items still did not have signs up indicating the discount. Signs such as "20 to 40 percent off storewide" and "nothing held back" were somewhat misleading. Cosmetics and fragrances are not discounted, which is typical of most department store GOB sales, including Bloomingdale's at Mall of America last year. One store employee said the cosmetics and fragrances would be around at full-price until Valentine's Day and then removed from the shelves.
Cold weather items such as winter coats, scarves and gloves were discounted 50 percent in men's and women's departments, including a few on clearance that received an additional 20 percent discount.
Holiday gift collections such as Harry & David Moose Munch buckets ($34 regularly) were discounted 70 percent in St. Paul, but at the downtown Minneapolis store, the same item was discounted higher, at 75 percent off.
Overall, shoppers who remember the Bloomingdale's GOB sale a year ago could see similar patterns at work. (Macy's owns Bloomingdale's.) The identical signs advertising the percent savings hang from the ceiling throughout the store. However, Bloomingdale's opening salvo was lower at 10 to 40 percent. The sale will last 7 to 11 weeks.
Macy's spokeswoman Andrea Schwartz said the store will continue to employ its regular sales people along with a liquidator. When liquidation specialists are brought in help with a sale, there aren't usually as many deals, said Patrick Fleetham, who owned Fleetham Furniture in Uptown and Re-Furnish in Bloomington.
Like at the Bloomie's sale, the best deals are on items that rarely go on sale or are already on clearance. Any items that are on sale at other Macy's stores are not on sale at the St. Paul store. that makes the GOB price often higher than a sale price. For example, Martha Stewart Plush towels ($18 for a bath towel before the discount) are discounted 20 percent at the GOB sale. They're not on sale at the other Macy's stores currently, but they typically sell for $10 when they are on sale. How can a shopper know? Macy's puts its prices in an acrylic stand near the item. Anyone can look behind the cardboard sheet in the stand and find the sale price sheet behind it. There's no secret to it. Macy's employees will show the sale price in front of customers.
Unlike the Bloomingdale's sale, no Oriental rugs and furniture have shown up yet. According to the Better Business Bureau, stores cannot bring in unrelated merchandise to a closing store or continue the sale longer than 120 days. Even though the Macy's downtown did not sell Oriental rugs or furniture, the store would be allowed to bring them in because other Macy's stores sell them, said Dan Hendrickson at the Better Business Bureau of Minnesota.