Commentary

Target Sets Its Sights On Free Shipping, More Ad Spending And Renewed Ethos

Target’s new CEO, Brian Cornell, and his helpers are spreading good cheer about the upcoming holiday season all across Medialand with numerous one-on-one interviews revealing plans to offer universal free shipping for online sales, outlining its upcoming advertising campaign, and dishing on a host of other initiatives from interactive iPhone apps for kids to aggressive couponing on its Cartwheel app to guaranteed price-matching from Nov. 1 through Christmas Eve.

“We’ve spent time as a team to see how we can differentiate ourselves,” Cornell, the former CEO of Sam’s Club and CMO of Safeway, tells Kavita Kumar of the Minneapolis Star Tribune. “Leading with free shipping for the holidays we think is a really important step for Target.”

The free shipping “raises pressure on Target’s rivals to match the offer, increasingly a requirement for shoppers to make purchases online,” observes Paul Ziobro in the Wall Street Journal. “A study by advisory firm Deloitte found that up to 60% of online shoppers abandon their shopping carts due to unexpected costs, including shipping.”

Walmart currently offers free shipping on orders more than $50 with delivery in six to nine business days; Amazon.com “provides two-day shipping free on 20 million items to members of its Prime program, which costs $99 a year,” Ziobro reports. This in an environment where “e-commerce sales were up 15.7% in the second quarter from a year ago, according to the U.S. Census Bureau,” while total retail sales rose 4.4%.

But its not just about how shoppers get their things, of course, it’s also about their experience.

The retailer is “bringing its ‘Tar-zhay’ ethos back to the fore,” writes Phil Wahba in Fortune. “Target has long been a favorite of middle-class shoppers drawn to its combination of cool, quality items and low prices. But the company admits it has strayed from its ‘expect more, pay less’ mantra in recent years, focusing too much on pricing and not enough on cool merchandise.”

Target’s television advertising from 72ndandSunny will begin rolling out Nov. 2 ranging from “a 60-second anthem to 15-second ads promoting a specific product, like Beats headphones,” reportsAd Age’s Natalie Zmuda.

“The retailer will thread together its holiday advertising with different versions of the same song, ‘A Marshmallow World,’” by Karen O of the Yeah Yeah Yeahs, writes Zmuda. “Bullseye will also crop up in TV advertising in a bigger way than shehas in years past. At 650 stores, a likeness of Bullseye will be on display and shoppers will be encouraged to take selfies.”

“In the last few years, we drifted too far away from some of those elements that make Target, Target,” according to CMO Jeff Jones. Jones also indicates that the company will spend more on advertising for the season, writes Bloomberg Businessweek’s Matt Townsend. “A major reason for that bump is a 50% increase in digital advertising, including paid search and online video,” Townsend reports.

At the same time, the retailer is “adjust[ing] its vision away from its own navel,” writesMarketing Daily’s Karl Greenberg, who covered Jones’ presentation at the Association of National Marketers’ Masters of Marketing conference in Orlando last week.  

“Jones said that for too long the company had ‘hunkered down in Minnesota and benchmarked ourselves,’ but now it has moved to bring in more expertise from outside,” Greenberg reports, including opening offices on the coasts and conducting “unscripted town halls” with employees and senior leaders.

Meanwhile, “at a design studio in Manhattan, Kathryn Tesija, executive vice president of merchandising, highlighted the goods that the company expects will win back shoppers this Christmas,” Townsend reports. “There were $20 hand-sewn pillows, a faux fur vest for less than $35 and an exclusive collection of items from feel-good shoe brand Toms. All the items were part of an increase in the amount of new products unveiled for this holiday.”

As for the security breach that affected up to 110 million customers whose credit card information was stolen last November and December, CEO Cornell suggests that data theft has become the new normal and not something about which shoppers are holding a grudge.

"Talking to the Target guest, this is not top of mind," CEO Cornell tellsUSA Today’s Hadley Malcolm in an far-reaching interview that includes video snippets. “I think this has become much more of an industrywide issue.”

But that does not mean the company is indifferent. “We are looking at this every day, 24 hours a day, making sure we have the right detection, monitoring, containment and response plans,” Cornell said, Zmuda reports.

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