Target is the second largest general retailer in the US behind Walmart, with around 1,870 stores nationwide by May 2020. The group sells a broad range of goods including beauty products and household essentials, appliances and home furnishings, apparel and accessories. It added groceries to the mix from 1995 with the launch of larger "SuperTarget" stores, and is now the #3 US food retailer after Walmart and Kroger. It acquired grocery delivery service Shipt in 2017 for $550m. The majority of outlets also contain a pharmacy, and some also a walk-in clinic. These were originally company-run, but Target sold that entire division in 2015 to CVS Health, which now operates all in-store healthcare services. The group's huge REDcards storecard portfolio is managed by TD Bank. One of the big retail success stories of the 1990s, Target was transformed from the sleepy Dayton Hudson Corp department store business to one of the country's most aggressive retail brands. Key to that success was its strategy of positioning itself as a high-style brand despite its low prices, attracting shoppers who would normally avoid discount retailers. It did this with clever and eye-catching marketing and a series of partnerships with high-profile fashion and houseware designers under the banner "Design For All". The perceived appeal of these upscale-looking items at low low prices resulted in Target being jokingly referred to with a mock French accent as "Tar-zhay". Private label or exclusive products now account for around a third of total sales. Historically a US-only business, Target launched into Canada for the first time during 2013, opening more than 120 stores in less than a year. However this wildly ambitious project proved a dismal failure, and the group's troubles were exacerbated by a huge online security breach which resulted in theft of personal information for millions of customers. Former PepsiCo executive Brian Cornell was appointed as chairman & CEO in 2014. He pulled the plug on Canada at the beginning of 2015 (at a huge loss) to allow the group to focus on boosting its US performance. With the increased competition from Walmart and especially Amazon, this took longer than expected, but the corner was finally turned during 2017. Target now operates only in the US again - the Australian chain of Target stores is entirely separate, part of Wesfarmers, although it uses similar branding - but the group has a substantial sourcing and production division in India. Revenues for 2019 were $78.1bn, with net earnings of $3.3bn. Target has a sizeable online operation, but as of 2019 this still generated only 7% of sales. However, the Covid pandemic caused ecommerce sales to more than double during 2020. Full year revenues jumped by 20% to $93.6bn, while net earnings soared by a third to $4.4bn. Other digital operations include the standalone skincare site Dermstore and inhouse media agency Target Media (previously Roundel).
Capsule checked 26th August 2020
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Historical profile information for Target
Adbrands Weekly Update 8th Mar 2018: US retail giant Target claimed to have turned a corner after several years of weak performance and a dismal holiday season in 2016. "What a difference a year makes," said CEO Brian Cornell. "You don't have to get too far into the numbers to see our strategy is working." Investors weren't so sure, triggering a 5% decline in the company's share price. Target reported its 3rd consecutive quarter of growth, including a 29% increase in ecommerce sales (beating Walmart's 23%). But earnings per share came in below expectations, and profit margins slipped: proof that more still needs to be done. For the year, revenues were up 3% to $71.9bn while net earnings rose 7% to $2.9bn. Much of that profit increase came from tax reforms. Adjusted earnings excluding exceptional items actually slipped 13%.
Adbrands Weekly Update 14th Dec 2017: Target announced the acquisition of grocery deliveries startup Shipt for $550m, with the aim of matching the service already offered by Amazon and Walmart. Uber-style, Shipt outsources buying and delivery to a team of around 20,000 independent contractors in selected local markets. They buy the required products from nearby stores and then deliver to individual customers, who pay an annual fee plus delivery charge. By bringing that service inhouse, with products sourced entirely or mainly from its own stores, Target aims to offer same-day delivery in about half its stores by 2Q 2018.
Adbrands Weekly Update 2nd Mar 2017: US discounter Target took the markets by surprise with worse than expected figures for its latest fiscal year, and a gloomy forecast for the current period. Same store sales fell by 1.5% over the holiday quarter, and full year revenues slipped 6% to $69.5bn, the first time since 2011 they have fallen below $70bn. A sharp rise in expenses and in finance costs prompted earnings to slump by almost 19% to $2.74bn. That contrasted with solid increases reported by other big box retailers like Walmart, Home Depot and Lowe's. Target CEO Brian Cornell warned that profits for the year to 2018 will be as much as a quarter below expectations, but he vowed to spend $7bn over the next three years to improve physical stores and ecommerce operations as well as on price cutting and the development of new exclusive brands. In particular Target aims to re-establish its "everyday low price commitment" in categories such as household products, personal care and food. With Aldi now flexing its low price muscles in the US just as it has already done with great success in the UK and Australia, several analysts warned of the potential for a similarly fierce price war among leading US supermarkets.
Adbrands Weekly Update 26th Jan 2017: US retail giant Target named Rick Gomez, previously SVP, brand & category marketing, as its new CMO, succeeding Jeff Jones who resigned late last year to become president of Uber.
Adbrands Weekly Update 1st Sep 2016: US retail giant Target's CMO Jeff Jones is the latest defection from old school marketers to the new generation of tech-based "disrupter" companies. He is joining Uber as president of ride-sharing, with responsibility for operations, marketing and customer support. He takes over that role from co-founder and board member Ryan Graves, who remains with the company as head of its UberEverything new business division. "Our vision is simple: to redefine how a large operations effort can be tightly integrated with a customer-obsessed marketing strategy," said group CEO Travis Kalanick in a statement.
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