Has Target Got It All Wrong?

Watch the following video from the Harvard Business School. It speaks to consumer behavior and marketing in recessions.

Professor Quelch says that recessions are the time to "expand your voice" through marketing. It is also a time for redefine or entrench your message with consumers as picking up 1 point of market share in a recession is much cheaper than in an upswing. It is during recessions that consumer behavior becomes entrenched.

Quelch says, "Recessions are not a time to hunker down...."

This goes back to my post from last week on Target (TGT), Wal-Mart (WMT) and Sears Holdings (SHLD).

Wal-Mart is using the recession to hone its value message with consumers and the results have been nothing short of perfect for them. Sears is using it to redefine itself and the best place for consumers to shop for appliances and it is working as they have picked up market share for three consecutive months there.

Wal-Mart's message since before the recession started was "Save More...Live Better" and it has resonated with consumers. It re-routed billions of dollars from expansion to improving the look of aging stores. It has a new focus on electronics and is now currently selling Apple's (AAPL) iPhone.

Sears, while not blanketing consumers with messages, has been very pointed with its "Blue Crew" appliance folks and the price guarantee that allows the consumer to search the internet at Sears to assure themselves they are getting the lowest price. It has spent money improving and rolling out a top notch website to increase its web presence. Both are working.

Can anyone tell me what Target has done during the current downturn to capture market share, or in this case just keep up with Wal-Mart? Target used to be a "nicer Wal-Mart". It was viewed as cleaner and almost as affordable. Now that Wal-Mart has improved its stores and brought in better merchandise, Target is just viewed as "a more expensive Wal-Mart". In tough economics times, that is not the place to be in especially when most of your locations sit across the street from the other guy's.

At least in my area Target's electronics section is woeful compared to the new redesigned one at Wal-Mart. Since this area seems to be the last bastion of consumer spending, this is now a huge plus for Wal-Mart at Target's expense. Target used to be hip, with the iPhone, Wal-Mart now is.

What message is Target projecting to the consumer? I can't name it. To be honest I do not remember the last time I saw a Target ad on TV. Can you? If I am, I am certainly not remembering the message it attempted to send me so in that case whatever it said was not effective.

Target in a sense has gone "fetal".

If Target is banking on consumers returning to prior shopping habits "once things get better", they ought to watch Professor Quelch, that just is not that way it happens...


Disclosure: Long WMT, SHLD

Comments

[LAH:]

Target has aired several TV ads in the past 4-6 months focusing on the value- titled "A new day, new ways to save". See article in NYT for more info.
With Shoppers Pinching Pennies, Some Big Retailers Get the Message www.nytimes.com/2009/0...

Apr 13 03:00 PM

[jamesa40:]

Target is too busy focusing on keeping management entrenched and Bill Ackmann out of the picture. If they ever get away from that saga, maybe they'll realize they have a company to run.

Apr 14 08:25 AM

[User 352369:]

For years I used to shop at Walmart and also felt Target was the "more expensive Walmart".

Over the years, Walmart customer service has taken a hard dive. The interior feels dark and dirty (the lighting), and the isles are usually untidy. They don't always have the best prices. I can go to Macy's and find some of the same items 50% off far surpassing Walmart's pricing.

I used to be loyal Walmart customer. No longer.

I like Target.

Target is clean and bright (enjoyable to walk into). Their products range from high-end designer to conservative and affordable. They seem to pride themselves on customer service as well as store organization.

I don't watch a lot of commercials (due to DVR's) but when I do, I like Target's new commercials. They're fun, innovative and visually appealing. Target also incorporates other brand names/products into the ad as if they're all working together, which to me, can be a win-win for all parties in this tough economy.

I now shop at Target most of the time. I love the store and the experience. In other words, I look forward to shopping there. I know the products are quality items and priced reasonably. Even if a product sells for less at Walmart, it's worth it to me to spend a little more and be able to enjoy all the above perks at Target.

As for the stock market, Target (TGT) is doing very well. I don't work for or with Target, nor does anyone I know. I just like to shop there and that's why I invested in TGT.

Apr 14 05:29 PM

[David Livin...:]

Target is too busy trying to figure out how to sell groceries outside of Minnesota. Actually they really don't know how to sell them in Minnesota but since they are a home town favortie, consumers give them a pass.

Target is wasting too much time and energy trying to be politically correct. I see no compelling reason to shop them. Their employees are a slight step up in class compared to Wal-Mart, their customers a huge step up in class, but prices are insulting. Just go to Wal-Mart, wade through the trailer park crowd, and get what you need.

Apr 28 06:15 PM