Published: Monday, September 19, 2005
Target marketing scheme emphasizes style over price
The retailer's trendy image could hurt it if economic times worsen.
Target Corp. has been working extra hard to appear hip.
The discount retailer paid $1.5 million in August to have its red-and-white, bull's-eye logo peppered throughout New Yorker magazine. It hired a team of acrobats to leap off the Rockefeller Center (with harnesses) in clothing from its fall collection. Even its pet department is taking on a new look, with "Black Bling" T-shirts and leopard-print sweaters for pooches.
But could Target's trendy image become a liability in a world of soaring gasoline prices, declining consumer confidence and economists raising the specter of a recession?
Target's stylish ads and savvy merchandising might have won it a loyal following among younger and more fashion-conscious shoppers, but some analysts think the company must do more to emphasize its low prices.
Concerned with costs
"It doesn't matter how high your income, when gas hits $4 a gallon, you're going to start paying attention to prices," said Richard Guha, a principal at the New England Consulting Group in Westport, Conn. "Now is the time for Target to change its advertising to the world at large ... and to reassure people that, yes, you can find low prices here."
For the time being, there is a perception among many shoppers that Target is more expensive than its chief competitor, Wal-Mart Stores Inc. of Bentonville, Ark. In July, BIGresearch of Columbus asked 900 female shoppers who buy clothing only on sale or at a discount where they most often buy. Target ranked a distant No. 5, behind both Wal-Mart and Kmart.
Yet analysts who cover the discount retailers insist this perception is not grounded in reality. Jeffrey Klinefelter, a retail analyst at Piper Jaffray & Co., insists that Target's prices for basic items are frequently lower than Wal-Mart's, and rarely more than 2 percent higher on any given item.
Unlike its Bentonville competitor, Target still emphasizes style over price. In one of its latest back-to-school shopping ads, Target features children dancing in circles to hip-hop music; prices aren't even mentioned. They are a marked contrast to Wal-Mart, which continues to use its price-slashing smiley face in its TV ads.
Target's strategy is deliberate. "At Target, value is about more than low prices it's about trend-driven merchandise with the everyday basics, a unique shopping experience, and a commitment to the community," said Paula Thornton-Greear, a spokeswoman at Target.