Target hits consumers bulls-eye
Defiantly stylish yet shy of upscale, phenomenal chain increasingly gets the 'guests'
It won't come as a surprise to inveterate shoppers, but Target is the object of the kind of buzz that once only upscale retailers like Nordstrom could muster.
Target has 'brought a fashion sense to the budget-to-moderate price zone through exclusive licensing agreements, something that had not been done previously,' says Leslie Burns, a professor of apparel merchandising at Oregon State University.
The formula seems to be working. Target's sales are up Ñ and the discounter is expanding in the Portland area at a time when traditional retailers such as the May Co. have found it necessary to consolidate.
May Co. announced May 3 that it would close its Meier & Frank subsidiary's Portland administrative headquarters this summer and transfer the functions to its Los Angeles-based Robinsons-May chain.
Friends Shannon Miller and Kym Ussing enthused about Target during a recent late afternoon visit to the retailer's bright and meticulously ordered new store at Jantzen Beach, which boasts such amenities as a conveyor adjacent to the escalators to transport customer shopping carts between the first and second floors.
'The prices are really good,' says Ussing, a floral designer who lives in St. Johns. 'The quality is better than Kmart, they have a good sense of style ÑÊthere's a lot of cutting edge stuff.'
Ussing bought her dining room chairs at Target. 'They were the same exact shape, the same exact style, as Pottery Barn, for a fraction of the price,' she says.
'It's nice to have the new store close by, but I would drive anywhere to go to Target.'
She won't have to drive far. Target now has nine stores in the Portland-Vancouver area. The two newest, at Jantzen Beach and Fairview, opened in March. Two more are slated to open in July, at Mall 205 and in east Vancouver.
The Jantzen Beach and Mall 205 stores both are former Montgomery Ward stores, sold to Target after Montgomery Ward went bankrupt.
Sandy Nellor, manager of the Jantzen Beach store, is not surprised by the rapturous testimonials from customers. The goal, she says, is to keep the stock 'trendy, but very value-driven.'
The results are showing up on the Minneapolis-based retailer's top line. Year-to-date sales at Target stores nationwide have climbed 17.3 percent over last year, in part because of new stores added, in part because of same-store sales growth.
While No. 1 retailer Wal-Mart earns the award for low prices, and Kmart often is dismissed as cheap and tacky, Target consistently gets the prize for style.
Shoppers can browse household furnishings designed by architects Phillipe Starck and Michael Graves (whose postmodern Portland Building attracted worldwide attention two decades ago), clothing by Italian designer Mossimo Gianulli and makeup by Sonia Kashuk.
'I think their management style is better,' Portland retail consultant Burton Nudelman says of Target. 'And if you have good management, you have a good company.'
Referring to Wal-Mart and Kmart, he says, 'They all try to buy fashion merchandise, but I think the general perception of the public is that you're getting a better fashion picture from Target than you are from most of the other mass merchandisers.'
'It doesn't feel scuzzy when you're in Target,' shopper Elanna Schlichting says. 'When you're in there, it feels pleasant.'
Even without a designer's name attached, Target merchandise includes items not likely to be found at the other two discounters Ñ Italian pottery dishes, for example, or 250-thread count sheets made from Egyptian cotton.
'They've got beautifully designed things,' says Schlichting, a free-lance editor, who recently bought some of the sheets, as well as a duvet.
Target Corp. opened its first store 40 years ago as a discount division of the Dayton Hudson Corp., and grew in 17 years to become the company's largest revenue producer. It now looks like a retailer for the new century, a discounter that offers a hip merchandising mix in a big-box format.
Bright colors of fuchsia, green and yellow line the housewares, furnishings and garden aisles. And designer Gianulli's vivid, trendy affordable line of clothes is aimed at teens and women.
Target's parent corporation, which reported 2001 revenues of almost $40 billion and net earnings of almost $1.4 billion, symbolizes how things have changed. Last year, the 99-year-old company dropped the Dayton Hudson name and re-emerged as Target Corp. Ñ a nod to the fact that the more than 1,000 Target stores bring in more than 80 percent of the corporation's revenues.
Other Target chains include Mervyn's, with 264 moderate-priced department stores in 14 states, and Marshall Field's, an upscale, full-line department store chain with 64 stores in eight Midwestern states.
'There are several reasons we're doing well in a tough environment,' says corporate spokeswoman Cathy Wright. 'We believe that we've listened to our guests (Target-speak for customers) and the trends, and we've got the right merchandise they're looking for in our stores at the right price.'
Companywide, Wright says, there's a sharper focus on in-store stock levels and inventory. 'Our gross margins are in good shape,' she says, 'and we're managing markdowns. A lot of aspects of the business are coming together and contributing to this performance.'
Schlichting sums up her view of the retailer: 'They've got some great stuff. They've got Michael Graves, for Pete's sake.'