Target Proves Chic and Cheap Works
June 27, 2001 -- Cheap sells, chic sells, but cheap and chic together? That's a retailer's dream.
Welcome to the dream. Over the past decade, Target, or Tar-zhay, as its fans call it, has put 900 stores into retailing overdrive on a combination that leaves other mass merchandisers drooling.
Target stays on target by employing crystal-gazers such as Robyn Walters, vice president of trend analysis. Walters predicts trends and launches them into the production pipeline months before they're seen on the store's shelves and clothing racks.
What's in production now? "The up-to-the-minute trends for summer 2001 are a huge influence of stripes, polka dots and Hawaiian florals and graphics," says Walters.
Whatever Target is selling, customers are buying. "It's a step up from a Kmart or Wal-Mart," says a shopper. "I find the quality of the clothing is better, and I have a bigger selection here. I mean, I get my bathroom supplies, everything — from soup to nuts — in the one store, which is very helpful for me."
Discount retailing has landed on the style map. The fickle fashion customer has spoken. Tar-zhay is stylish.
"We're always working to make sure that what we're offering is new exciting, hot and hip," says Jerry Storch, vice-chairman of Target. "If it means taking a little risk, well, great, because if you take no risk, then you fail," he adds.
Tools of the Trade
Target's cutting-edge advertising campaign has been half the battle. It screams hipness and reminds customers that the retailer carries everything from hair mousse to waffle irons.
Last year, Advertising Age named Target marketer of the year. Alice Cuneo, national retail editor for the magazine says, "Its origins have kept it really … in the forefront of not only the products — which are an important part of merchandising — but an application to the marketing side of things. They know how to shift with the times."
And they also know how to reach out to the best and the brightest designers in the business. Michael Graves, the darling architect of the trendy, first teamed with Target in 1998 when the company sponsored the renovation of the Washington Monument. Target asked him to design a shroud to cover the construction work. Now the retailer carries 300 items, from chess sets to tea kettles, designed by Graves.
Target also carries clothes made by Mossimo Giannuli. Customers can get a designer "off-the-rack" outfit for around $20. And the company hopes they're getting their dishwasher detergent and pet food at the same time.
Staying Ahead of the Market
With designer products like the Graves tea kettle and Mossimo's Hawaiian-style shirts, Target has managed to distinguish itself from "plain vanilla" competitors like Wal-Mart and Kmart. And even in a sluggish economy, sales at Target stores were up 11 percent in the last quarter.
Over the past five years, Target's stock has soared, keeping pace with larger Wal-Mart. At the same time, stocks of Sears, J.C. Penney and Kmart have declined as the retailers continue to fall behind the two powerhouses.
Daniel Barry, retail analyst at Merrill Lynch, thinks one reason the stock has done so well is because the company is known for its consistency. "They're very, very steady and they've been growing at pretty much an 8 percent growth rate in space for many, many years. And that's the plan going forward. I think they'll be able to grow at an eight percent rate for possibly another decade," he says.
That's an amazing story for a business based on the trends at the moment.
"The only risk would be if the customer suddenly decides [he or she] doesn't want to buy fashion in a discount store anymore," argues Barry. "And it seems like the trend is just the reverse, so I don't think that's really much of a risk."
Storch agrees. "When people ask if we can stay cool, hip, trendy for years to come, we don't know any other way. That's who we are. That's who Target is. We think there will always be a market for that."
Other retailers take note. It's not easy to be cheap and chic at the same time.