Retail innovation is an essential process, not an event
Retail in many ways has always been a battle for consumers. The earliest shops in open markets had to compete for customers by differentiating both products and prices. In the age of "Big Box" retail the battle for customers has reached an epic, and even more intense scale. The battle of mass merchants in the US has come down to Target and the Whale of Retail – Walmart. While Target use to "own" the female consumer segment, it has suffered some setbacks and lost some of its cache. Two recent Target initiatives are signs that Target may be on the road back to creating the mojo for "cool chic" that differentiates the Target Brand.
Why this is important: Nothing is constant or a given, especially in retail. Retail reinvention is not a fad, but an essential requirement for survival in today's competitive market. Innovation must also be an ongoing process, not an event.
The future of retail belongs to those who can evolve
Through the relatively recent history of retail in the US, there are classic case studies of the rise and fall of retail giants. One of the most spectacular perhaps was Circuit City. It absolutely dominated electronics before there was a Best Buy. Circuit was featured in the book "Good to Great". If there had been a sequel to that book, it would have also featured Circuit's rapid decline when it did not adapt quickly enough to changing consumer patterns.
There is also a new factor today not a prevalent a decade ago … online shopping. Omnichannel shoppers are now shopping anytime and everywhere. Retailers like Target cannot afford to compete by selling on price. A core essential for retail store survival has to be continuing to evolve differentiation. Not just being different for difference sake, but creating uniqueness that consumer's value.
Target's mojo – "Cool Chic"
I have three daughters that grew up in the age when Target literally owned the female customer segment ages 18-54! A testament to Target's appeal is my daughters making multiple trips to Target every month, carrying home multiple bags with that red "bulls eye". When asked why not shop at Walmart which is closer, there was a classic teenager response of "rolling of eyes", with the statement that "Target's stuff is 'cool', and I wouldn't be caught dead wearing Walmart clothes".
Target was able to profitably complete by differentiating its products. Target hired designers like Isaac Mizrahi design cook wear … it was still cooking utensils, but it had a "cool" factor, and only found at Target. So, while women could buy toothpaste and soap anywhere, they preferred to shop where there were bright wide aisles, with cool brands and merchandise.
Innovation versus reinvention which differentiates
Target hasn't exactly been sitting on its laurels. One area of innovation has been Target's Pharmacy. Target has been a leader in using Pharmacy to as a key way to get consumer traffic to stores, especially moms. Target has even innovated with much easier to open prescription pill bottles.
Target has also evolved in developing their small footprint store: "Target Express". They have been able to fit their stores into urban settings, even using multi-floor space in metro areas like New York. Vital stores were consumes want to shop is a core foundation for retail success.
But, pharmacies and small store footprints do not make differentiation! Arch rival Walmart is aggressively on the same path. And, store design and pharmacies are not exactly "cool chic" for consumers. The Target brand needs reinvention and revitalization in the eyes of consumers.
Target's new twist on localization – Local Pride merchandise
The Wall Street Journal published a recent article on how Target is "chasing trend loving consumers as they move from the suburbs back into city centers". They are doing that by creating localized merchandise that plays off local tastes and trends. They feature local offerings as Cape Cod Chips, Flufflenutter sandwiches, and Fenway Franks. The idea is to make Target feel localized like a part of the neighborhood … offering unique merchandise that other stores don't sell. Now that's the "Ole Target Magic"!
Another return to Target's formula for brand chic is that they have hired designer Paul Snyder to create "Local Pride". Snyder merchandise will launch in Boston stores and play off local accents and sayings. In addition to coffee cups with green shamrock designs, t-shirts will have regional slogans like "Wicked smaht". Target store associates will be wearing red t-shirts printed "Tahget", which a local Boston phonetics pronunciation of Target, that brand loyalists also use to make Target sound more elegant and chic.
It sounds like someone at Target has the mission to get their "cool chic" back, and create the unique brands and fun that can only be found in Target stores.
Target goes big and bold to bring it "home"
What has often not been talked about as a core Target differentiator is their ability to make the complex simple by using "consumer speak". Frankly many women (and men as well) appreciate Target's signage that explains technology in simple English. More importantly, Target has been know for communicating how products apply to our lifestyles and homes.
One of the most interesting signs of compelling innovation is Target's new "Open House" concept store. Target has completely reimagined the retail experience of showing consumers how smart home automation can connect and work for them. This store is in fact a mock up a home with "glass walls". The focus is on the interactive kiosks where consumers can make a personal connection and try out things hands on. In classic Target fashion, instead of using acronyms and tech jargon, things are written in consumer speak and scenarios with very simple buttons like "Coming Home" and "Leaving Home".
Cool chic – Requires innovation and engagement at a personal level
What made Target successful in its battle with Walmart was the ability to differentiate on "cool chic" and products that could only be found at Target. Hiring Todd Snyder to launch Local Pride definitely sounds like Target has its groove back for differentiated merchandise and fun.
But, Target's Open House concept store sounds particularly promising. In the coming age of IoT (Internet of Things), consumers will require more than product displays. Adoption of home automation has been slow because consumers literally can't see the value, or try out concepts for themselves. Target may be ahead of the curve in creating a personalize experience that will not only bring consumers back, but help customers see how to make their homes "cool".
Innovation that differentiates is hard work … it is an ongoing process, not an event!
The litmus test will be whether consumers shop Target stores for both the "cool stuff" and personalization that they can't get at a store down the street … or online!
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Sources:
- Twice Magazine: Target Brings It Home, Christopher Caen and Jamie Capozzi; July 20, 2015
- RetailWire: Target targets local pride, Tom Ryan; July 20, 2015
- Local Pride Graphic: A Bullseye View; Target
- Open House Graphic: A Bullseye View; Target
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