Reviving Target’s Tar-jay SpiriT
After a difficult 2016, Target leaders recommitted to the iconic brand’s strengths. Target’s laser-like focus on consumers, investments in stores, technology, private label brands, and fresh approaches to marketing all contributed to making Target one of today’s top retailers.
Target has a lot to celebrate these days, and its business has never been stronger. However, the company knows to always remain humble and hungry. Back in 2016, Target’s success was hardly predictable when it witnessed its worst year since the recession. Its expansion efforts into Canada failed, it suffered a massive data breach amid the holiday season, and its competitors were rising.
Although it felt as though Target needed nothing short of a miracle, it was able to turn around its business and become a growth company again with a series of strong years. All it took was getting back to the basics and meeting its guests’ needs in a differentiated way.
Creating the Target Brand
Target was founded in 1962, a defining year in retail and the same year that Walmart and Kmart opened. Each store was founded by established older companies responding to changes and consumers’ need for shopping options closer to home. By the 1990s, all three stores had reached national scale while smaller, regional discount retailers faded away.
In the midst of its growth, Target realized that it had to carve out its own niche and it created the “Tar-jay” magic that guests today continue to love. Target began opening 100 stores a year, right up until the economy collapsed. By the time it came out of the recession, the retail industry had changed and opening new stores was no longer a solution to success.
In 2017, Target made a seven-billion-dollar investment to build back its strengths through in its own brands, stores, teams, digital experience, and fulfillment services. Since then Target has launched more than two dozen new Target-owned brands. It has also opened 100 small formats in urban neighborhoods and near major college campuses. It has remodeled hundreds of its stores, and is currently on track to raise its minimum wage to $15 per hour by the end of 2020. It became the first retailer to offer nationwide same-day delivery and curbside drive-up.
Target has since seen nine quarters of consecutive growth in-store and on digital. Rick Gomez, EVP, chief marketing and digital officer at Target, believes that Target’s brand love is rooted in its marketing, and that the feelings it inspires are as important as the products it sells. Brand love alone, however, is not enough — retailers which didn’t survive the recession didn’t fail because they lacked brand love; they failed because consumers stopped shopping there.
Target Circle
Target is relentlessly focused on how to transform love for the Target brand into engagement, traffic, and ultimately sales. It puts its guests first, working with urgency, honesty, and embracing new approaches even when the old ones continue to work.
In 2017, Target tested “red perks,” its point-based loyalty program. In light of the company’s weak business performance, there was pressure to launch perks nationally. The program, however, didn’t feel like Target — it was too transactional and not special. Target ultimately pulled the plug on red perks after listening to guests and benchmarking against world-class loyalty programs. Target went back to the drawing board, and a year after shutting down perks, it launched a new beta program, Target Circle, which was designed to engage all guests ranging from the Target enthusiasts to the least committed. Every time consumers shopped at Target, they would be offered a 1 percent discount and a vote for which charity their local store supported. Target Circle also provided personalized offers based on how consumers shopped, giving them access to exclusive discounts and experiences.
Guest response to the new program has already been impressive, reaching nearly two million active users in six test markets. It has also resulted in nearly a million dollars being contributed to local charities. The program has ultimately allowed Target to strengthen its relationship with guests, unlock new opportunities for personalization, and do so in a way that resembles the Target brand. Target Circle is a total reset on loyalty and is expected to have millions of members in all 50 states when it launches nationally.
Target Run
“One of the challenges that a lot of big brands face doesn’t come from consumers or even competitors — it comes from within. It’s their own internal processes.” — Rick Gomez
Like any company, Target also faces input, reviews, testing, and processes that can slow it down. Back in 2017 when it needed to get a campaign to market to address problems it was facing in food, beverage, and essentials, it launched Target Run in just nine weeks. This required a leap of faith: less input, fewer reviews, less testing, and taking risks. In the end, Target Run performed extremely well and became one of Target’s strongest performing campaigns in the past two years.
New Stores
Another part of Target’s growth strategy is its small-format stores and getting into neighborhoods where the traditional Target prototype would never work. New York has been a priority market for this initiative. When Target enters a new part of the city, it hosts a grand opening to introduce Target and show off the store that has been designed specifically for that neighborhood. Tribeca and Herald Square stores were both well received, and in the summer of 2018 Target repeated its approach when opening a store in the East Village. It created a temporary façade as a nod to the community’s history, which was poorly received. When a blogger criticized Target for connecting its brand to a famous club, a debate on gentrification and logo culture was spurred. The story went viral and was picked up on social media as well as by local and national news outlets. Target accepted the criticism and didn’t try to rationalize its way out of it. It slowed down its plans to open a store in the Lower East Side to work with government affairs and community relations, showing community residents its plans. The event received no backlash, and Target remained true to its brand.
Design for All
Target’s 20th anniversary of its design partnerships was fast approaching, prompting it to launch “Design for All.” Since its first partnership in 1999 with Michael Graves, it has created limited-time only collections with 175 different designers, including Sony, Lilly Pulitzer, and Victoria Beckham. Target’s partnerships are more than making products affordable; they are about a commitment to designing for all and the belief that great products should be accessible to everyone. Target strives to reflect all of its guests through inclusive sizes and expanding assortments to include entire families. It also casts accordingly in its marketing to show that its designs are for everyone.
To celebrate two decades of such partnerships, Target sought out a new approach to its marketing and relaunched hundreds of items from 20 of its most iconic partnerships at their original price. It published a keepsake book and produced a documentary on what design for all means to Target, and hosted experiential moments. It had a big out-of-home presence, including a display in Vegas the size of a football field. Target aspires to values such as design for all, inclusivity, and guest focus every day, and in all that it does.
Key Takeaways
Target’s willingness to try new approaches to how it thinks, and the way it puts content out into the world, is its most impressive attribute. Change isn’t always comfortable, but in today’s environment the best work comes from what is least comfortable. Target’s recent initiatives were not easy, but they were the right thing to do. This is the kind of work that ensures success isn’t temporary but is instead something that is continuously built upon. Target is always looking for new and better ways to serve its guests. Gomez encourages all marketers to ask themselves three things when getting ready for a new campaign, reviewing strategy, or handling a crisis:
1. Is there anything in your plans that gives you pause?
2. Is there anything that’s truly new?
3. Most importantly, are you doing right by your brand and for the consumers that you serve?
“Reviving Target’s Tar-jay Spirit.” Rick Gomez, EVP, Chief Marketing and Digital Officer at Target. 2019 ANA Masters of Marketing Week Conference, 10/3/19.