Business
SIGNS OF LIFE
Target’s journey over the past few years demonstrates that changing the direction of a large corporation is like trying to reverse a moving freight train. Things have to slow down before they can go the other way. But after 18 months of aggressive change, it appears that consumers may have finally gotten the message. During the first half of 2010, sales rose by as much as 5 percent with profits up a whopping 54 percent. Both spending per visit and the number of store visits increased. All this could be attributed to the fact that the effects of the recession were starting to loosen up and consumer confidence was stabilizing. But in a sign that Target’s efforts were truly paying off, Walmart’s sales growth was slowing during this same period and even showing signs of decline. Customer perceptions of Target’s value were indeed on the rise.
Steinhafel made it very clear that the new signs of life at Target were being met with cautious optimism. “Clearly the economy and consumer sentiment have improved since their weakest point in
2009,” said the Target CEO. “But we believe that both are still somewhat unstable and fragile and will likely continue to experience occasional setbacks as the year progresses.” Steinhafel’s comments reflected an understanding that even as the economy showed signs of recovery, research indicated that consumers everywhere were adopting a newfound sense of frugality and monetary responsibility.
Target’s “Pay Less” strategy has continued forward without wavering. Pricing seems to have found the sweet spot as Steinhafel announced that few adjustments are needed. Ads continue to emphasize low prices on everyday items. And the expansion of groceries and store brands has continued. In fact, for 2010, Target planned just 10 store openings, the lowest in its history. “It will be a long time before we approach the development pace of several years ago,” said Doug Scovanner, Target’s chief financial officer.
Target’s journey over the past few years demonstrates that changing the direction of a large corporation is like trying to reverse a moving freight train. Things have to slow down before they can go the other way. But after 18 months of aggressive change, it appears that consumers may have finally gotten the message. During the first half of 2010, sales rose by as much as 5 percent with profits up a whopping 54 percent. Both spending per visit and the number of store visits increased. All this could be attributed to the fact that the effects of the recession were starting to loosen up and consumer confidence was stabilizing. But in a sign that Target’s efforts were truly paying off, Walmart’s sales growth was slowing during this same period and even showing signs of decline. Customer perceptions of Target’s value were indeed on the rise.
Steinhafel made it very clear that the new signs of life at Target were being met with cautious optimism. “Clearly the economy and consumer sentiment have improved since their weakest point in
2009,” said the Target CEO. “But we believe that both are still somewhat unstable and fragile and will likely continue to experience occasional setbacks as the year progresses.” Steinhafel’s comments reflected an understanding that even as the economy showed signs of recovery, research indicated that consumers everywhere were adopting a newfound sense of frugality and monetary responsibility.
Target’s “Pay Less” strategy has continued forward without wavering. Pricing seems to have found the sweet spot as Steinhafel announced that few adjustments are needed. Ads continue to emphasize low prices on everyday items. And the expansion of groceries and store brands has continued. In fact, for 2010, Target planned just 10 store openings, the lowest in its history. “It will be a long time before we approach the development pace of several years ago,” said Doug Scovanner, Target’s chief financial officer.