Shop Talk

Retailers, consumers and prices

Check Out Line: Off Target

May 20, 2008

dog.jpgCheck out the other discounter.
 
The wisdom in the struggling U.S. economy is that discounters are doing well as consumers trade down to try to save some money. It has worked for Wal-Mart, which saw first quarter profit rise 7 percent, while same-store sales rose 2.9 percent.
 
Not so much for Target, though.
 
That discount retailer today posted a 7.5 percent decline in net income for the quarter and its same-store sales dipped 0.7 percent and were weaker than the company had expected.
 
For a time, Target attracted customers with an approach that became known as “cheap chic,” with designers like Isaac Mizrahi developing exclusive clothing lines for it. At the same time, Wal-Mart has stumbled with its own attempts to upgrade its apparel offerings.
 
But even before the economy went south, Wal-Mart refocused on offering lower-priced value, a move that has helped the company in an economy that many say is in a recession.
 
Meanwhile, sales are falling short of Target’s target. And  Mizrahi has left to become creative director at Liz Claiborne.
 
Right now, it looks like the dog days for Target, while Wal-Mart sports a smiley face.
 
Also in the basket:
 
Home Depot posts quarterly loss 
 
Saks Inc posts higher quarterly profit 
 

(Photo: Reuters)

Comments

This is a disturbing notion… economic trough is getting the best of everyone these days isn’t it? *sigh* Even my beloved Target…

Though I have noticed that The fortune 500 company I work for (State Farm Insurance), hasn’t suffered to drastically…

 

and oh, may I say, capitalist jerks do in fact have control.. =]

 

I think that neither price nor product selection are the reasons Target is failing to reach its financial target. Target is alienating its customer base with poor policies, weak upper management, and poor use of its lower-level talent.

Target’s 90-day return policy may be reasonable but it is not competitive in some areas, so Target should be especially careful about the quality of the breakable products it sells. On two recent occasions, I took back products to Target that had one-year warranties, had broken within 6 months, but did not get returned until after 90 days. Only one store manager agreed to at least try to communicate with upper management about a potential problem with the warranteed product. Two managers claimed that Target tracks poor-performing products, but I determined that there was absolutely no mechanism to do this after the 90-day return period (and no interest on the part of the store managers to take independent note of a potential problem). On both occasions I was told “We don’t make the products – we just sell them,” which is a pretty sure-fire way to lose a customer. I was given a client services phone number to call that just gave a recorded message with the same “We cannot help you” message. I tried a similar experiment with WalMart and management gave a much more appropriate and personal response. Target hires college graduates but does not let them use their judgment. WalMart grows its own talent and lets its managers be proactive. This might be at least one reason why Target is losing customers.

Posted by Suzanne | Report as abusive
 

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