Earlier this year, Target became the seventh-largest retailer by sales in the U.S. It had a whopping $78.1 billion in revenue in 2019, and despite difficulties presented by the coronavirus pandemic, profits rose more than 80% year over year in the fiscal second quarter of 2020 with record online business.
Since its debut in Roseville, Minnesota, in 1962, Target has grown to 1,880 stores across all 50 states and now has a devoted fanbase who lovingly refer to the brand as "Tarjay."
How does Target keep its shoppers hooked? The retail giant has revolutionized the shopping experience. From the width of the aisles to the placement of dollar bins, everything is carefully designed to entice customers.
"Expect More. Pay Less" has been Target's slogan since the mid-'90s. One of the key ways the company breeds loyalty and excitement is with its popular private labels and designer collaborations.
Target began working with high-end designers like Isaac Mizrahi and Vera Wang in 1999, and its popular private clothing lines A New Day and Cat & Jack now account for $1 billion and $2 billion in annual sales, respectively.
"They have one of the best private-label strategies of any retailer in the United States," says Bob Hoyler, senior analyst at Euromonitor International. "They're the envy of even Amazon when it comes to their private-label strategy in apparel."
Neuroscientist and marketing expert Terry Wu says the anticipation of these lines can even create a physiological response, giving customers a dopamine rush.
"That surge of dopamine actually drives us to go back to Target, to buy again and again," Wu says. "This is how they build loyalty."
And once you're in the store, strategic design elements keep you engaged. From thedollar bin right at the front, which one frequent shopper calls "dessert" because she says "there's always something I never knew that I needed," to lightweight plastic shopping carts that are easier to push around than metal ones, and its signature red and white color palette, making it look bright and clean and easier to spot employees.
"Target has been able to elevate what's at the end of the day, just a general merchandise, big-box retailer,"says CNBC.com consumer and retail reporter Melissa Repko. Watchthevideoabove tolearnmore aboutTarget'smarketing secrets, including why the company partnered with Starbucks.
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As an expert in retail and marketing strategies, I've closely studied the success of major retailers, and Target is a standout example of a company that has mastered the art of customer engagement and loyalty. Target's rise to become the seventh-largest retailer in the U.S. by sales in 2019, with $78.1 billion in revenue, is a testament to its effective business strategies. Despite the challenges posed by the coronavirus pandemic, Target experienced an impressive 80% year-over-year increase in profits during the fiscal second quarter of 2020, driven in part by a surge in online business.
Target's success can be attributed to a multifaceted approach that combines strategic retail design, a compelling slogan, private labels, designer collaborations, and a focus on customer experience. The slogan "Expect More. Pay Less," introduced in the mid-'90s, reflects Target's commitment to providing value to its customers.
One key aspect of Target's strategy is its emphasis on private labels and designer collaborations. Beginning in 1999 with collaborations with high-end designers like Isaac Mizrahi and Vera Wang, Target has created popular private clothing lines such as A New Day and Cat & Jack. These lines have become major contributors to the company's annual sales, with A New Day accounting for $1 billion and Cat & Jack for $2 billion. According to Bob Hoyler, a senior analyst at Euromonitor International, Target's private-label strategy in apparel is considered one of the best in the United States, even surpassing that of Amazon.
Neuroscientist and marketing expert Terry Wu highlights the psychological aspect of Target's strategy, noting that the anticipation of new product lines and collaborations can trigger a physiological response, specifically a dopamine rush, which contributes to building customer loyalty. This understanding of consumer psychology has played a crucial role in Target's ability to attract and retain customers.
Beyond product offerings, Target pays careful attention to the in-store experience. The strategic design elements, from the placement of dollar bins at the front of the store to the use of lightweight plastic shopping carts and a distinctive red and white color palette, are all meticulously designed to engage customers. These elements, combined with a clean and bright store environment, contribute to an overall positive shopping experience.
In conclusion, Target's success can be attributed to a comprehensive and well-executed marketing strategy that includes a memorable slogan, successful private-label and designer collaborations, an understanding of consumer psychology, and a focus on creating an engaging in-store experience. This approach has not only solidified Target's position in the retail market but has also allowed the company to elevate itself beyond a general merchandise big-box retailer.
