- Target reported 2018 first-quarter earnings on Wednesday. Same-store sales were up 3%, and CEO Brian Cornell said that the strongest categories in the quarter were home, essentials, and food & beverage.
- Target is known for its addictive shopping experience, which analysts say is partly driven by its exclusive collections in homeware and clothing.
- Shoppers often joke about going into a store to make one purchase but ending up buying far more.
The age-old saying goes that if you walk into Target to buy one thing, you’ll almost certainly leave with 100 more.
Because of this, the internet is awash with memes and tweets joking about how impossible it is to leave the store without a full basket.
In fact, it’s such a well-known symptom of shopping at Target that the so-called “Target Effect” even has its own Urban Dictionary entry.
But this doesn’t happen by chance. Target has a cult following of fans, including Beyonce, who are lured into buying more than they plan to thanks to clever marketing, the positioning of products in the store, and the treasure hunt-like experience of shopping there.
Despite this, the retailer continues to come under pressure as consumers shift to online – an area where it significantly lags behind its peers. Target’s online store currently generates around $US4 billion in sales annually versus more than $US23 billion at Walmart and more than $US60 billion for Amazon in North America, according to investment research firm Morningstar.
Target has had mixed results in the past two years. Three-quarters of negative same-store sales in the fiscal year of 2016 were followed by four consecutive quarters of positive same-store sales growth in the fiscal year of 2017 and early 2018. It is now investing heavily in its e-commerce platform and focusing on rolling out smaller store locations in urban areas to reach a new customer base.
Find out how Target is enticing you to fill up your shopping carts below:
It makes it easy to find and see what you need.
Target wants to make it as easy as possible for its customers to find what they need and purchase products without worrying about how they will bring them home.
The layout of stores is an important factor in this.
“There’s great signage to guide you,” Ioli Macridi, a research analyst at PlanetRetail RNG told Business Insider.
Once you find the section you’re looking for, some will have an expert sales adviser on hand to give you guidance. About 330 of its stores offer a beauty concierge service, for example, where an adviser can give expert advice on skincare and beauty products. In other locations, there are baby registry advisers.
These in-store services are one of its biggest assets for conversion, Cowen analyst Oliver Chen wrote in a note to investors in March, adding that: “customised and thoughtful service is an important competitive advantage for Target versus Amazon.”
Target is also increasingly focusing on creating ways to make it easier for shoppers to load up their carts without the fear of transporting these home. A new service, which is reserved to its urban locations, allows customers to have their purchases shipped home that day for a flat fee of $US7 ($US25 extra for larger furniture pieces).
The seasonal selection draws customers to the store.
In every store, including its smaller locations, Target devotes a section to season-specific items such as Halloween and Easter.
“Target is a seasonal leader,” Macridi said, and some customers go to the store just to shop this selection.
To encourage them to browse for more, the seasonal section is typically located at the back of the store so customers need to walk the entire space to get there, she added.
It offers a treasure-hunt shopping experience.
Target has channeled the TJ Maxx/Ross Stores style of treasure hunt shopping to win over consumers.
“Stock is rotated in and out,” David Gordon, research director at PlanetRetail RNG told Business Insider, so there’s a fear of missing out factor, he said.
By regularly adding new items and keeping the inventory fresh, shoppers are more likely to buy things there and then.
When it launches exclusive collections, such as this month’s collaboration with Hunter, it stocks limited amounts of products so that there is a big hype around selling out. This backfired somewhat this month with theHunter collection as customers complained that stock was so limited it never even made it to their stores.
Customers love its private-label collections.
Target is known for its private label brands and has doubled down on this area of the business.
In 2017, it launched eight new brands including women’s apparel line A New Day, menswear collection Goodfellow & Co., home goods brand Project 62, athleisure brand Joy Lab, and Hearth & Hand with Magnolia, a home goods collaboration with Chip and Joanna Gaines from “Fixer Upper.” CEO Brian Cornell said the store will launch another four over the course of 2018.
These products are a way to differentiate Target and boost profit margins while still being able to offer customers affordable prices. They are a big asset in driving traffic to stores and given that they are cheaper than other well-known brands, customers are likely to buy more.
The strategy seems to be working – in just over a year, sales at its kids’ apparel brand, Cat & Jack, surpassed $US2 billion. Overall, private label now makes up around one-third of its total sales, according to Morningstar.
It offers unique partnerships and products.
One of Target’s biggest differentiators to other big-box stores is its partnerships and collaborations.
According to The Washington Post, Target has rolled out 175 different partnerships since it launched this concept in 1999. Recently, this has included a clothing line with Victoria Beckham, a homeware collection designed by the Gaines’ (the couple behind TV programme Fixer Upper), and this month’s Hunter boots and outdoor wear collaboration.
These exclusive designs not only create a hype around the store but a reason to visit it.
“These types of lines actually drive little in sales, but the real win is to drive people to stores and have them buy everything else they need,” Sucharita Kodali, an analyst for the market research firm Forrester told The Washington Post. “It’s perfect for Target.”
Social media campaigns help to drive traffic to the store.
While Target lags behind its competitors on the Facebook fan front, it is far outpacing them on Instagram, an app which customers are increasingly using for shopping online and as a place to find inspiration before heading to stores.
“They are very good on social media about promoting,” Ioli Macridi, a research analyst at PlanetRetail RNG told Business Insider, and this helps drive traffic to stores.
Target frequently reposts photos uploaded by shoppers and bloggers using its products on Instagram to humanize its social media campaigns. And, makes it easy to shop for anything featured in these photos by linking the images on its feed to their corresponding web link.
Some customers come solely for a coffee or to grab lunch.
Analyst David Gordon told Business Insider that retailers are increasingly devoting more space to areas where people can come in, have a coffee, and interact.
Target offers a Starbucks cafe in many locations, and in the past has also partnered up with other suppliers such as salad chain Freshii to offer fresh salads and wraps.
Most recently, it opened a Chobani cafe in its New York Tribeca store. As this is one of only three Chobani stores in existence, this is a tactical way to drive new customers to this location and encourage them to shop the store before or after they visit the cafe.
It makes one final push right before you check out.
Target makes one final push at the cashier to make that final sale with its Bullseye Playground section.
Referred to by Target as: “That grab-and-go mecca at the front of Target stores known for killer dollar deals,” this isn’t just a candy station.
These mini curated sections are located at the front of stores with a selection of products that are either on promotion, are locally related, or seasonally related. It’s the last chance for shoppers to load up their carts.
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