Business Strategy

           Target is one of the biggest stores in the U.S. and is the biggest competitor to Walmart. Walmart's strategy is based on cost leadership and it excels in achieving this goal. For Target For Target to focus on cost leadership, it would mean a head to head battle on prices with Walmart and could end in a disappointing loss. Instead, Target has chosen a differentiation strategy. Through this strategy, Target tries to achieve the ultimate shopper experience. They're "guest" oriented -which is what they call their customers.

        Target gives their guests a great looking store, a fast, fun and friendly team to help, and a fast check out whenever they're ready to leave the store. The items that they offer throughout their stores are also a big part of their differentiation strategy. They partner with many designers to assure that their merchandise has a fit for all styles and ages. 

        Throughout every department in Target, you'll find plenty of different designer items that reach out to many different kinds of people -whether it's Giada's cookware or Mossimo's stylish clothing. The Minneappolis Business Journal quotes "Target's enduring blend of style and mass discount proves that value and hip are not mutually exclusive."


Buyer Power
          
          Target’s buyer power is high due to many different retail stores that carry similar items and services like Walmart or Kmart.  Target has found ways to reduce this buyer power by providing excellent customer service and an amazing shopping experience. This provides a switching costs for customers because they would give up on the added benefit Target gives to its customers for another company which will not have the same “guest” oriented environment.  

          Target also has their very own credit card which they call a “Red Card.” This credit allows guest to receive 5% off with every purchase- an added incentive for customers to return to Target through a loyalty program.  Plus, 5% of Target’s income gets donated to projects that help the neighborhood.  Targets across the country have been renovating school libraries with this 5% income.

Supplier Power
          
         Supplier power is low due to the many different companies that can offer similar products.  If a firm would like to have its product inside of Target, they need to bargain with Target.  Everything is purchased in bulk so the price is usually reduced.  If for any reason a particular company decides to increase their prices, Target can easily switch to another company for a better price.  Firms would not want to pass up the opportunity of having their products at Target because of the increased customer loyalty that will keep their products selling.

Threat of Substitute Products or Services


           For Target the threat of substitute products or services is high due to the many retail stores.  Wal-Mart being the number one competitor for Target in terms of pricing.  Target resorts to their differentiation strategy to reduce this threat.



Threat of New Entrants


         For this particular industry, the threat of new entrants is high due to the number of retail stores that open up continuously.  For Target, it's not much of a threat due to their history and ability to deliver results in profitability.  Target has recently introduced a P-fresh area to their stores, which carries fresh produce alongside their market are of food in order to increase their competitive edge.  Through this, they increase the customer traffic in their stores and will also increase their customer loyalty.
 
Rivalry among Existing Competitors

          The rivalry in this industry is high.  Every company wants to drive their sales and increase their profits.  Some try to compete on prices while others like Target have a blend in their competitive edge using low prices combined with a great guest oriented experience.


Streamlining Initiatives

        Target Corporation has chosen Compaq's Zero Latency Enterprise architecture to redefine its customer relationship management model and provide a foundation for increasingly innovative guest services.The Target implementation of ZLE, will enable the retailer to optimize and leverage customer interactions across its enterprise by ensuring real-time access to information. This technology creates opportunities for unified guest services by integrating touch points whether a customer is shopping in the store or on-line.

        The retail chain's first distribution center opened in Fridley, Minnesota, in 1969. It included a computerized distribution system and was known as the Northern Distribution Center. During this time, the chain consisted of seventeen stores after having expanded into Oklahoma and Texas.

On August 9, 2004, Target announced to their suppliers that they were going to perform a trial on the effects of radio frequency identification on the efficiency of supply chain management in the Dallas/Fort Worth Metroplex. This trial involved one Target distribution center and ten nearby Target stores. Here, tags would be placed on the bar codes of pallets and cartons to track the goods from the suppliers to the distribution center, and from the distribution center to the stores.

E-Commerce

Target corporation quietly developed an e-commerce strategy that involved managing its own online distribution. It bought Rivertown Trading Company, a Twin Cities-based mail-order firm, in 1998 for $120 million to handle fulfillment, marketing, and distribution services for the e-commerce efforts of all the corporation's retail units. Online retailing gained a larger profile in early 2000 with the formation of a separate e-commerce unit called Target Direct. New store brand web sites were launched later that year.

Also, Amazon is providing Target with its proprietary search engine, order-fulfillment and customer-service systems, and one-click shopping application, which lets customers pay for merchandise selected from the Target, Marshall Field's, and Mervyn's sites via one electronic shopping cart. In exchange, Amazon gets an undisclosed percentage of all sales from Target's retail sites, as well as annual fixed fees, an Amazon spokeswoman says, adding that the company wants to leverage its E-commerce expertise through similar arrangements with other companies, too.

Target corporation uses a kiosk service, in that if you go on to the consumer website, you will be able to track items by price, most recent items and by most popular items being sold. Any and every customer has access to all of their product information.