The pros and cons of global trade perhaps have never been so starkly contrasted than this week.
On Monday, the National Retail Federation and other trade groups released a report they commissioned that articulates how the United States benefits from imported goods.
A few days later, Time magazine publishes this searing photo of two workers who perished after a building hosting apparel factories collapsed in Bangladesh, killing over 800 people.
In many ways, these two publications vividly demonstrates the paradoxical world of international economics: the benefits of low cost clothing in one country can often come at the expense of another country.
Bangladesh is a poor country in southeast Asia that’s home to a multi-billion apparel industry where low cost workers make clothing for the world’s top retailers, including Wal-Mart, The Gap, and Minneapolis-based Target Corp.
By using low cost suppliers in Bangladesh and other countries in Asia and Latin America, Americans enjoy cheap prices which allow us to afford a better lifestyle, or says the NRF report:
“Imports are not the bogeyman some Americans believe them to be. On the contrary, they benefit our economy in a number of ways. They provide consumers of all income brackets with a greater variety of goods at lower prices. They constrain inflation. They encourage manufacturers to constantly improve quality and innovate while providing them with needed inputs at lower prices…It is time to give imports the credit they deserve.”
Fair enough. But the report conspicuously omits how the United States’ appetite for imported goods impacts the countries whose citizens produce them.
Target and other retailers have noted they hadn’t knowingly sold products made from the collapsed factory in Bangladesh but that’s almost besides the point.
That incident, along with a deadly fire at another factory last November, demonstrates the systematic poor conditions garment workers face throughout the country.
Target is well aware of these problems, noting that it took action in 2011 to pull out or modify buildings that presented severe fire hazards. The company says it conducts several audits, some unannounced, of its suppliers.
But these audits seem like no match for an entire industry in Bangladesh that’s beset with fire hazards and dubious building designs.
So does Target stay in Bangladesh and help change things? Or does it pull out of the country? Most of its sourcing comes from China and the Americas anyway.
Target declined to comment on its future plans. But the fact remains that retailers’ business models depend on finding cheap sources of foreign labor.
Those business models produce tangible benefits to Americans, as the NRF report notes, in the form of low prices and jobs. But it also produces photos like Time’s pic.
Well, that was certainly unexpected.
Commuters arriving at Grand Central Station in New York this morning got a full blast of Target Corp.’s Expect More motto when they encountered the equivalent of supercharged pop up store.
Called The Dollhouse, the 1,500 square replica foot of a house, complete with bedrooms, patios, and kitchen, features 3,500 items from Target’s Threshold housewares collection, including bedding, dishes, and towels.
“Putting our Threshold collection in a house would be the most natural setting to showcase the brand,” said Julie Guggemos, vice president of product design and development. “Dollhouse invites people into it to experience the product, to touch and feel it.”
Target is known for heavily promoting its exclusive collaborations with designers and musicians. But this project represents one of the retailer’s most ambitious attempts to plug a store brand, one of several private label programs overseen by Target’s sizable internal design staff.
Threshold is really an effort by Target to rebrand its home goods products. Target’s other store brands include Mossimo, Market Pantry, and Archer Farms.
Planting the store smack in the middle of Vanderbilt Hall during rush hour probably required Target to pull a few strings so to speak. Fortunately for Target, the retailer sponsored Grand Central Station’s 100th anniversary celebration.
Workers built the Dollhouse in Queens and then moved the structure to Grand Central where it took them three days to assemble it.
In a further nod to Target’s focus on multi-channel retailing, the house carries about two dozen products shoppers can purchase by using their smartphones to scan a QR code. Target.com will later ship the product.
The Dollhouse will remain up until Tuesday.
No blurry vision here. Target Corp.’s exclusive release of Justin Timberlake’s special edition “20/20 Experience” has been an unqualified success.
Though the retailer would not disclose specific figures, Target did say first week sales places it among the company’s top three best selling albums of the decade. JT also became Target’s best selling male artist since 2002. (He failed, however, to overtake Taylor Swift’s “Fearless” as Target’s best selling first week album of all time.)
Target certainly rolled out the red carpet for JT’s first album in six years. ABC aired a well received commercial created by Target immediately following JT’s performance at the Grammy Awards. Target also threw an elaborate party and concert in Los Angeles on the day of the album’s release last month.
But lost in the hoopla is the album’s content, specifically the hit single “Suit & Tie.” The song contains six references to a swear word that sounds like ship. Rapper mogul Jay-Z, who pops up in the middle of the song, contributes a derogatory word commonly associated with African Americans.
Here are some of the lyrics:
I be on my suit and tie, s*** tie, s***tie (Repeats several times)
D'usses on doubles, ain't looking for trouble
You just got good genes so a n*** trying to cuff you
This blogger is not personally offended by the lyrics. But what’s remarkable about “Suit & Tie” is how these words have slipped into mainstream America in recent years without barely a howl.
And it doesn't get any more mainstream than Target.
“Target’s approach is to support the creativity and artistry of our music partners and the way they choose to present their music,” Target spokeswoman Katie Boylan wrote in a statement.
“As we seek out partners, there are a number of things Target considers, including how the artist's music may resonate with Target's guests,” she said. “We also look at how their past albums have performed in the general market and at Target, as well as broader industry trends.”
It didn’t seem so long ago when Tipper Gore, who co-founded the Parents Music Resource Center, urged Congress to pass a law requiring record companies to slap warning labels on songs that contain “objectionable content.”
Today the record company and artist, working with the Recording Industry Association of America, ultimately decides whether an album requires a “Parental Advisory Warning.” (PAW)
Target said it defers to the industry for PAW warnings.
Wal-Mart, Target’s chief rival, outright bans any album with the PAW label. The retailer also said “it occasionally may refuse to stock music merchandise that may not seem appropriate.”
20/20 Experience does not carry a PAW label and both Target and Wal-Mart sell the album.
Part of the reason is context. “Suit & Tie” is a fairly benign song. And JT is a an artist with a clean cut reputation along the likes of other Target-affiliated artists like Tony Bennett, Swift, Beyonce (Jay-Z’s wife), and Michael Buble.
But then again, the pop band Maroon 5 is not exactly a hard core act. (Lead singer Adam Levine is a guest judge on NBC’s The Voice for Pete’s sake!) The group’s “Overexposed” album features a PAW label, mostly because of the F-bombs found in the song “Payphone.”
For the record, Target does sell the original version of Overexposed. Wal-Mart will only sell the edited version of Overexposed. So by these standards, s*** and n***a are acceptable but f*** is still out of bounds.
Ron Johnson can be rightly credited with reinventing retail twice: first as the Target executive who helped create its “cheap chic” persona and second as the Steve Jobs’ co-partner behind Apple’s famed retail stores.
So why couldn’t Johnson work his old magic on JCPenney? The answer is relatively simple: JCP needed a turnaround guy, not a reinvention guy.
“Mr. Johnson apparently thought JCPenney and Apple were on equal planes…and boy, was he wrong,” said Robert Pasikoff, president of Brand Keys in New York.
Turnaround and reinvention are not necessarily the same things. For one thing, reinvention is best done from a position of strength. If you are going to take big risks, best you have deep reservoirs of cash and good will to draw upon.
Apple and Target were already successful companies when Johnson worked there. His ideas helped keep them on top.
JCP was entirely a different matter. Growth was stagnant. Shelves were messy. Identity non-existent. But all for its problems, JCP was a a financially stable company with a core group of loyal customers.
That may not exactly fire up the Wall Street bulls but at least it’s something. Problem is, Johnson didn’t see much in the old JCP worth preserving.
Johnson’s biggest move was to immediately scrap the coupons and weekly clearance sales that its customers had grown accustomed to.
The reasoning was sound. To constantly discount your merchandise means to constantly cheapen your brands and your stores.
But to quickly eliminate those deals is akin to forcing a drug addict to go cold turkey. The results are messy.
“We told him it was silly, that he was trying to do too much too quickly,” said a former top retail executive who advised Johnson and some JCP board directors.
He requested anonymity so he could openly discuss private conversations.
“Try it out in 30 stores but for God’s sake, don’t roll it out all at once,” he said. “You have to retain the core customers. If you take something away, you have to give them something else.”
It’s easy of course to second guess a freshly fired CEO. But retail is a very conservative business. Customers don’t change overnight simply because you want them to.
Despite Johnson’s pedigree, he probably needed to rack up a few decent quarters or perhaps a year before making such a bold move.
That’s not to say a CEO can’t think big. But that CEO should probably have an equally big cushion should his big idea fails.
Jobs, after all, blew it with Apple TV. And Target CEO Gregg Steinhafel misfired with the retailer’s holiday partnership with Neiman Marcus.
Both men not only kept their jobs but pundits praised them for taking risks. Because years of stellar performance should count for something.
Johnson’s credentials will probably earn him a shot at another retailer.The big question is whether that retailer needs a turnaround specialist or a reinvention guru.
Johnson, at least right now, fits only one of those labels.
Rick Gomez is Target Corporation’s new senior vice president of brand and category marketing. Given that rather bland title and the opaque maze of vice presidents that occupy Target’s headquarters in Minneapolis, Gomez’s hire doesn’t really stand out.
Except that it does, and not just because Gomez used to run marketing at beer giant MillerCoors.
Let’s start with the obvious: Gomez is Hispanic, a group of customers Target has actively pursued in recent years. In 2011, Target ranked 29th among the 50 largest advertisers in Hispanic media, spending $45.6 million, according to Advertising Age.
The retailer recently partnered with music produce Emilio Estefan to curate a special selection of movies, music, and books called “Emilio Estefan’s Picks.” Target also tasked Estefan with signing exclusive partnerships with Latin music artists.
Last year, Target hired ad agency LatinWorks, based in Austin, Texas, to court the Hispanic market.
In Gomez, Target has tapped an accomplished Hispanic executive to oversee “marketing strategies for all merchandise categories and brand initiatives including REDcard, exclusive artists and licensing, and creative collaborations.”
Under Gomez’s leadership, MillerCoors rolled out packaging for Miller Lite and Coors Light in both Spanish and English, sponsored a Mexican soccer league, and run Spanish language commercials on major television networks. The beer giant also provides grants to“Liders,” individuals whose work impacts the Hispanic community.
A longtime veteran of PepsiCo, Gomez also offers a significant food marketing experience to Target, which has focused more of its attention on its Archer Farms and Market Pantry private- label foods brands and P-Fresh grocery formats.
In addition, Gomez brings much needed diversity to the higher ranks of Target leadership. Despite its progressive reputation and its well- earned reputation for developing female leaders, Target’s ranks of executive vice presidents and corporate officers lack color. (Laysha Ward, an African American woman, is president of community relationships and the Target Foundation.)
Target displays a better record with its board of directors, which includes Yahoo! chief operating officer Henrique de Castro of Portuguese origin, Derica Rice, an African American and CFO of Eli Lilly, and Solomon D. Trujillo, a former telecommunications executive born to Mexican immigrants in the United States.
It appears that Target is having a good now, possibly bad later, problem at its Canadian stores.
According to Toronto-based Globe & Mail, customers are finding empty shelves at the three stores Target opened earlier this month in Ontario.
“We definitely were slammed,” John Morioka, senior vice-president of merchandising at Target Canada, told the newspaper. “We thought there would be an initial bump. The bump has not leveled off to the degree that we thought.”
Among the items in short supply? Milk.
Hmmm. Point of Sale has a hard time picturing hoards of shoppers breaking through the front doors to grab as much Target milk as they can.
Seriously, though, you’d think consumers would initially flock to Target for clothes, home goods, and accessories. The run on milk suggests that Target could be a formidable competitor to not only Canadian Tire and Hudson’s Bay but also supermarkets and major food retailers like Loblaw and Wal-Mart.
Target will open 17 more stores today so that should alleviate the shortages. But given the large and dispersed nature of Canada, the country presents a host of potential logistical and inventory problems to Target.
Perhaps mindful of this, Target recently decided to own three Canadian distribution centers they built in 2012 rather than lease it. The company will also add 15,000 square feet to 40 planned store locations by leasing adjacent space.
Target certainly knows the pitfalls of success. Yes, a retailer would kill to have customers clamor for its merchandise. But too much demand and not enough supply equals unhappy shoppers who are only too willing to vent their frustrations over social media.
Now if you excuse this blogger, he suddenly has a craving for half and half.