Hardware Retailing

MAY 2017

Hardware Retailing magazine is the pre-eminent how-to management magazine for small business owners and managers in the home improvement retailing industry.

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HARDWARE RETAILING | May 2017 92 360 SWOT Analysis Strengths S • Discount Chic: Target maintains a trendier, more upscale image than other general merchandise retailers such as Walmart and Kmart, while also using a discount model. • Customers With Cash: Target stores appeal most to well-educated, middle-class customers who have money to spend. • Philanthropy: The company, from its start, has built a reputation of generosity by donating 5 percent of profits to the communities where stores are located. • Strong Business Partnerships: Target has partnered with well-known companies, including CVS Pharmacy and Starbucks, to offer in-store experiences with popular brands. • Exclusive Collaborations: The company has found success with exclusive collaborations with celebrities, such as Isaac Mizrahi and, most recently, Victoria Beckham, to offer upscale clothing lines. • Investing in Innovations: Target partnered with Amazon to develop its original e-commerce business and has built successful mobile apps to help drive sales. The company also works with technology innovators to develop projects such as Target Open House, a store consumers can visit to test smart home products before buying. • Successful Target-Only Brands: About one-third of Target's 2016 sales came from its own product lines and brands offered exclusively through Target stores by companies such as Levi's, OshKosh and Carter's. Weaknesses W • Price Image: Target's upscale image limits its appeal to a relatively uniform customer base. A more expensive price reputation creates obstacles to attracting a varied audience. • Wide Variety of Products: Target's sales are spread almost evenly across five broad product categories, which could hinder the company's ability to develop a focused strategy for improving sales. Its product mix includes a wide variety of departments, such as children's clothing, groceries and sporting goods. • Recovery Mode: Target's recent renewed focus on its U.S. business, which has seen declining sales, has involved rapid staff cutsand an abrupt, expensive exit from Canada. The company also lost money due to a 2013 data breach that exposed payment information from tens of millions of customers. • New Store Formats: Target is investing in opening small stores in urban markets, but the smaller format is unproven and could be costly due to high overhead expenses in urban areas. • E-Commerce Sales: Target has touted its growing online and mobile sales, but e-commerce contributes less than 5 percent of its overall sales. • Investing in Innovations: Target has spent money developing futuristic tech projects it has had to scrap. That may be financially draining. • Limited Reach: Target is not an international company. Target Canada, its one retail venture outside of the U.S., was never profitable.

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