Target Bulks Up with New Promotion
By George Anderson, Editor-in-Chief, Associate Publisher, RetailWire
Target says its "The Great Save" promotion gives consumers all the benefits of bulk deals found at warehouse clubs without the need for any membership fees.
"The Great Save is a way for Target to offer our guests exceptional deals on everyday essentials -- just in time for their post-holiday stock-up -- and a treasure-hunt experience with a variety of exciting designer brands," said Kathee Tesija, executive vice president of merchandising, Target, in a press release. "This event is a fresh, innovative approach to meeting our guests' evolving needs and providing them with the opportunity to save even more at Target."
The promotion, which runs January 3 through February 21, is an attempt by the chain to build on the promise behind its "Expect More. Pay Less." tag line.
Consumers will be able to buy products across a host of categories -- from apparel, electronics, food, health and beauty care, housewares and more -- at substantial savings, according to the chain. All items in the promotion will be located in a single "Great Save" location inside the roughly 1,000 Target stores participating in the event. The chain operates 1,740 stores in the U.S.
The chain is also making some of the items in the promotion available for purchase online. Consumers can get more information by going to Target.com/thegreatsaveevent.
Discussion Questions: Do you see Target's "The Great Save" event as anything more than the limited club pack approach that others have taken when dealing with warehouse club competition? Do you see, for example, any format changes either in existing stores or a new concept as a result of this promotion?
RetailWire Instant Poll Results:
RetailWire BrainTrust Comments:
There is nothing wrong with "The Great Save" as a way to reinforce Target's value position. And it's also a good idea to find a new use for the "swing space" that Target has devoted to its "international collection" of furniture for the past few years following Christmas.
However, if the online assortment of bargains is any indication of the execution of "The Great Save" strategy, the actual success of the strategy is less certain. (Check it out at the Target website.) It's a very strange assortment of everything from closeout handbags to remaindered books ("Air Warfare from WWI to the Present Day," anyone?) But there is very little display of the sort of large sizes and multipacks of commodity items that send customers flocking to competitors like Costco.
Richard Seesel, Principal, Retailing In Focus LLC
Other mass merchants and grocers have smaller club pack sections but they really can't compete with Costco and Sam's in terms of selection, price and after service. Although, I would say Target may have an opportunity here if their grocery format doesn't work out. That space in test stores could be used for a bigger club pack section.
Doron Levy, President, Captus Business Consulting
"The Great Save" is a good promotional gimmick, but it does not represent a major format change. Grocery stores have been offering bulk packs for years. It does reinforce Target's tagline, "Expect More, Pay Less", but it does not foreshadow a storewide rollback of prices, like the one Walmart instituted a few months ago. Will it drive more shoppers to Target? Probably not. But it will save money for Target shoppers that want to buy in bulk, and that can build loyalty.
Max Goldberg, Founding Partner, The Radical Clarity Group
In checking prices I have found that Target is lower than its competition today on many items and some promotions. Many retailers including Cheap Central (Walmart) are subtly and blatantly increasing prices. Target still operates the cleanest and most inviting stores, an asset that doesn't necessarily convey cheaper prices...but seems to be moving in that direction. So count me in as a supporter of what Target is trying to accomplish...although they may have waited too long to start their offensive.
Gene Hoffman, President, Corporate Strategies International
Target's "The Great Save" is another win for shoppers, but I am unclear about how it will help them after February 21st when the program ends. Their tag, "Expect More, Pay less" is something shoppers are looking for on a consistent basis (every day). I am not sure "The Great Save" does anything to support "Expect More, Pay Less." If they ran it every month with new deals then it would tie in nicely. Shoppers would know each time they walked in the store that there would be a "Great Save" opportunity which helps them achieve "Expect More, Pay Less." Without running consistently throughout the year, these two tags are separate events and don't support one another.
John Boccuzzi, Jr., Managing Partner, Boccuzzi, LLC
Target's approach raises a number of questions. Is this a test by another name? By announcing that you are resetting your entire chain for a limited period of time, it sounds
that way.
While the company has always been a "value" brand, it has been positioned as a place to shop for the absolute cheapest price. Carrying brands and packages it normally doesn't carry may afford it the opportunity to provide additional savings but what is going to be the impact on the competing items it already carries? Will they simply be swapping the sales (and margin) they normally achieve?
Is this an attempt to attract a shopper that normally shops elsewhere in the hope that they will then purchase additional items while in the store? By creating a store-within-a-store format, are they encouraging shoppers to bypass their regular stock?
This reminds me of the c-store industry's flirtation with dollar aisles/sections within the store. Sounded great but failed to have the positive impact they anticipated.
Steven Montgomery, President, b2b Solutions, LLC
Target has run similar promotions in the past, however, even if they hadn't, there's nothing new here. Target has done a great job of switching gears and going pedal to the metal on value..."Job 2" will be to find a way out of the me-too quagmire and reinvent the Target brand in a compelling and differentiated way.
Carol Spieckerman, President, newmarketbuilders
Target is moving in the right direction - communicating the new value proposition to shoppers. But this campaign seems a mixed message. The online assortment of "deals" in the online promotion, as other writers have noted, seems a disconnect to "warehouse savings" in the lead-in.
Target has good products and pricing, but getting their new value message as a reason to believe will have to be much clearer and more unified, showing the new packages/club packs in promos and how it delivers new value. With purchase decisions made in seconds, busy, cash strapped shoppers need clear messaging and visual cues. The "Treasure Hunt" promo somehow seems less compelling in subzero January temperatures to holiday weary shoppers.
Anne Bieler, Sr. Associate, Packaging and Technology Integrated Solutions
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JANUARY 2010
Retailers Keep Pressure on National Brands
By George Anderson, Editor-in-Chief, Associate Publisher, RetailWire
Retailers, at least as anecdotal evidence goes, are playing hardball with suppliers, offering them the choice of playing along or taking their products to other venues.
In a recent discussion on RetailWire about Costco's decision to remove Coca-Cola products from its stores, 50 percent of those in the instant poll said Coke would take the biggest hit
from the move while 21 percent said both parties would be equally hurt. Twenty-eight percent said Costco would suffer financially from its decision. (Costco and Coke subsequently
came to agreement and announced, on December 10, that the soft drink would return to
warehouse shelves.)
Now, according to AdAge.com, Deutsche Bank analyst Bill Schmitz has reported that CVS/Caremark will pull the popular Energizer brand of batteries from its stores in early 2010. The chain intends to go with its own line of batteries along with Duracell. CVS said its private label line was the category leader in its stores.
"We found we can better serve our customers with a simplified assortment," CVS said in an
e-mail statement to AdAge.
The publication said CVS's action is part of an overall strategy that is focused on extracting more profits from the sale of branded goods. The chain is said to be engaging in bill-backs much as apparel merchants do.
"CVS recently began sending manufacturers 'bills' representing the difference between the profit they made on their brands this year and what they expect to make," according to unnamed supplier executives who spoke to AdAge.
Discussion Questions: Is the type of adversarial relationship seen between retailers and merchants in Europe going to be replayed in the U.S.? What recourse do consumer goods manufacturers have in an environment where retailers are focused on reducing SKUs and increasing margins?
RetailWire Instant Poll Results:
RetailWire BrainTrust Comments:
This all goes back to the age-old question of "Who owns the customer?" The retailer feels that they own the customer, and if a particular brand does not exist in their store, the customer will purchase the brand that is on shelf. The brand owner feels that THEY own the customer, and if they do a great job of building brand loyalty, the customer will walk out of the store that does not carry their favorite brand, and instead find a store that better fits its needs.
The fact is, in today's consumer-centric environment, both the retailer and the brand owner have it wrong. Neither owns the customer; the customer is their own person, and makes decisions neither on where product might be located physically, nor based on marketing messages to evoke loyalty. The consumer chooses to purchase product where they want it, when they want it, and for reasons that both marketers and retailers continue to try and understand.
So while the retailers battle the brand owners, and do silly things like invoice them for lost profits, the consumer will make decisions not on what product is carried in the store, or what brand shouts the loudest on television. The consumer refuses to be owned, and the retail community (CVS are you listening?) needs to make certain that before they make decisions solely on dollars and cents, that they dialogue with their customers and really ask THEM what THEY want.
Joel Warady, Principal, Joel Warady Group
SKU rationalization/inventory optimization are now key tactics for retailers. The natural result is less variety but, if done right, the impact on sales is minimal. The result on gross margin may be significant depending on what the brands being evaluated do.
For each brand, the object is not to improve the well being of consumer goods manufacturers to improve their respective position. This means working with retailers to become the brand of choice. How? That depends on the retailers' needs. The end result may be the retailers' PL and one brand. The trick is to make sure it's yours.
Steven Montgomery, President, b2b Solutions, LLC
There have been a number of new trends lately that concern me about how some retailers are approaching suppliers, the economy, and product assortment. Here, I can only touch the very surface:
- Many suppliers feel that some retailers are abusing suppliers in order to survive the economy, themselves. One retail chain has gone as far as to "ask" small suppliers to fork up as much as an additional incremental 12% of sales in new funding even without any guarantee of promotional performance.
- The above is just one example of how niche brands, innovation, and specialty offerings are becoming too expensive and unprofitable for entrepreneurs and smaller suppliers to even attempt. This would seem to have an erosive effect on the economy, the retailer and above all, the consumer.
- SKU rationalization has mostly good intentions but most of the processes I have looked at have a tendency to judge the future only by the past. In my estimation, SKU rationalization also results in nearly every retail chain selling only the same assortment of products without differentiation. Again, the impact can be quite erosive. Let me count the ways?
- Overall, some retailers have approached the economy by coming down hostile on suppliers as though the suppliers have unlimited funds available and are somehow not equally as entangled up in the same economic situation as the retailer.
That said, retailer-supplier relationships are often cyclical and these periods of hostility are often followed by periods of partnership and cooperation. I predict that will happen soon again when retailers realize again that they will have the upper hand only for so long.
David Biernbaum, Senior Marketing and Business Development Consultant,
David Biernbaum Associates
Eliminating branded goods and turning the assortment into a commodity essentially turns the retailer into a manufacturer. As manufacturers learned with their foray into outlet malls, this "says easy, does hard." There are skill sets and motivations that branded manufacturers have that retailers do not.
More importantly, it diminishes the offering to the customer in the store. I have yet to see a private label product that is as attractively packaged or carries the same level of earned consumer confidence as a well-known branded product.
This is a classic example of not understanding the difference between markup and margin. Markup is what you put the product out with. You have to actually sell it to get margin.
Bill Emerson, President, Emerson Advisors
For decades manufacturers forced retailers to "eat" their infinitely-expanding lines and SKUs of well-packaged goodies. Retailers went along with the ride, sometimes reluctantly, and got "fat" and "fatter" as their stores continually enlarged. That eventually created niches for the likes of smaller innovative retailers, lean of national brands, such as Trader Joe's and Aldi.
Eventually, financial doctors, spurred on by stockholders, starting prescribing that retailers begin to "diet" and cut down on the insatiable adornments of colorable and appealing SKUs being offered to them and become more spartan with fewer goodies of their own imagination to offer to their stores' guests.
Retailers began taking that advice, enrolling in marketing and design schooling, and now think that there is fiscal beauty in being lean among its own creations. While the jury is out, the parade appears to have begun.
Gene Hoffman, President, Corporate Strategies International
There were expected results in Europe when Ahold took Unilever products off their shelves--resolution was found, and UL products returned to their shelves fairly quickly. At the end of the day, shoppers decide. Removing an iconic brand is risky business, and lessons will be learned along the way.
Anne Bieler, Sr. Associate, Packaging and Technology Integrated Solutions
Historically, power cycles back and forth between suppliers and retailers, and for very predictable reasons. On one level, much of the power derives from brand strength. Consumer products companies have for at least two decades focused on establishing aspirational brand values, and non-tangible brand benefit delivery. Advertising became less and less about product features and benefits and more and more about consumer perceptions of themselves related to the brand's lifestyle positioning.
In the height of this period, brands were dominant, and indeed, as an ex-retailer I DO recall when I had to beg to be allowed to buy brands...and was given brand derivatives instead! The commodity level of each product category was happily abandoned to either private label or value-brands.....after all, who wanted to fight it out for very thin margins? Wasn't it better to be in the better/best grouping, demanding and obtaining premium pricing?
But budgets and spending are not infinite, and with enormous amounts spent on marketing -- plus with rising shareholder value appreciation expectations -- where was the cutback made? Product development. Not true of every industry, but the numbers are there to prove the point.
The social climate has changed. Aspirational marketing is not only inappropriate in a 10% unemployment world, it is seen at some level as the ultimate culprit (because consumers are never at fault for their own behavior). See recently published research on this subject for validation. Instead, consumers are value conscious.
Another factor combines with the above to create the current situation. A lack of clearly understood product advantages. Do Energizer batteries actually outlast the CVS ones? Maybe, but by how much? If the price difference is 30%, do the Energizer batteries last more than 30% longer? No one knows! And this is only one example. Product attributes have been lost in the marketing mix.
So if aspirational marketing is no longer a valid communication approach, and product attribute differentiation is poorly understood or completely opaque, why is it inappropriate for the retailer to exercise power? Branded manufacturers have become branded marketers. And if marketing isn't driving consumer behavior, what value is there in carrying the product?
Don Delzell, C0-Managing Director, Future Merchants
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