Target Aims At Digital; Unwraps Sweeping New Strategy

Big changes are coming from Target Corp., with the retailer vowing to regain its lost cheap-chic luster, sharpen its appeal to Millennials, woo more Hispanics, and make its ho-hum food aisles more appetizing.

It’s also shifting its marketing muscle even further into mobile and digital efforts. And if those revitalization plans aren’t ambitious enough, it also says it will trim $2 billion out of its operating expenses —  a move that will result in extensive job cuts.

The news, unveiled in a series of presentations to investors that were also webcast, included many frank admissions that while Target’s brand perception has recovered to the same level as before the company was swept up in a massive data breach in 2013, it has a long way to go to recover its pre-recession glory days, when it was known for delivering great style at a great price.



Brian Cornell, chairman and CEO, says much of the company’s energy will focus on its signature categories — style, baby, kids and wellness — which currently account for about 40% of its sales.

Digital marketing — and a channel agnostic approach — is key to that mission: Customers who shop in stores and online generate up to three times the sales compared to guests who shop in stores only.

Many of these changes are already underway, says CMO Jeffrey Jones in his presentation, with both online and mobile sales showing double-digit growth, “and outpacing the industry by 30%.” He says the company’s investment in search is up 55%, email driven sales are up 40% year-over-year, and this past holiday, digital was 43% of total budget.”

Thanks to its pioneering partnerships with Instagram, Pinterest and Facebook, “social media is driving meaningful traffic,” he adds, giving Target the “largest and most engaged social audience in retail.” He says customers engage positively with the brand 35,000 times each day in social media, or every 10 seconds.”

And there’s plenty of new marketing plays in the pipeline. Its first-ever entirely Hispanic effort launches next week, for example. Themed #SinTraducción, the ads focus on Spanish words with no English equivalent, and the company calls it “a sweeping celebration of moments, traditions and emotions that are treasured by many in the Hispanic culture.” Ads focus on young Hispanic parents, an audience it considers key to successfully completing its three-year plan.

Jones says special partnerships will continue to be key. He showed a not-quite-finished TV spot for its upcoming Lilly Pulitzer For Target collection, which goes on sale next month.

The ad shows a KC and the Sunshine Band-fueled party, complete with a Palm Beach mansion, zany dancing, a monkey serving highballs and a partying flamingo.

In the months ahead, 10-second videos, including “Ballin, Target Style” during March Madness, will replace digital banner ads.

Food is also an opportunity the company has been missing. “While customers buy food when they are Target, that’s not why they come to Target,” says Kathee Tesija, chief merchandising and supply chain officer. “We need to shift from groceries, which are transactional, to food, which is emotional.”

Besides focusing on the types of products that appeal most to younger shoppers, including organics, wellness-focused products and gluten free items, it also plans to cut the amount of time foods spend in transit to stores by 30%, to make them fresher.

“We are still in the very early stages,” says Cornell. “When we come back together three years from now we will be a different company, a leader in the digital space and even more guest focused than we are today.”

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