Irony is a cruel mistress for Target, whose demise reminds us of the importance of brand strategy

The decision to close hundreds of Target stores, or rebrand them to Kmarts, may have been avoided, Melissa Packham argues, if the company paid more attention to brand strategy, sooner.

It’s a sad day when one of Australia’s favourite retail brands closes stores at such scale, but it’s a demise which, at least from a purist brand strategy perspective, could have been avoided.

Target management has been talking for several years about the need to reposition the brand, to differentiate it from its sister brand, Kmart, and to get clear about its target audience. But it failed to do so in time to keep up with the market. Now, instead, employees who are already dealing with the impacts of COVID-19 are being punished further by the inadequacies of Target to deal with its known issues earlier.

Target’s strategic shortfalls remind all brand owners, no matter the category, of the most fundamental elements of good brand strategy.

Problem #1 should have been glaringly obvious to them.

Back in the mid-2000s, Target was a destination shopping environment, centred on its exclusive partnerships with high-end designers. The fashionistas came flocking. Target stood firmly for those who wanted accessible, high-end style.

Just two years ago, despite the honourable and necessary intent of engaging the whole business around the strategy, the focus was to shift back to its core customer of ‘mum’, using a swathe of data to inform the necessary changes to better serve her.

Cool. Except ‘mum’ is not a target audience.

Perhaps the in-store eye tracking didn’t pick up the fact her gaze was actually shifting to Kmart, where she could get (in many cases) identical, private label products for slightly less.

Mum isn’t stupid, you see.

Target’s persistence in employing an ever-so-slightly premium price to Kmart, coupled with the move away from branded items, hints at the struggles behind the scenes to maintain a profitable business model and the attempt to leverage economies of scale in the supply chain. But why should that have been the customers’ problem?

Kmart, on the other hand, had budget-conscious, house-proud mums feeling like it was finally okay to be frugal, singing and dancing their way down the aisles and then peppering social media with their clever #kmarthacks. Kmart created community. Because it saw that customers don’t want to shop where everyone shops. They want to shop where people like them shop.

Let’s not forget, it was Kmart that was on tenterhooks not that long ago, before its radical rebranding to reinvent itself for who it knew it could serve best.

External forces are always going to impact brands. However, to say the reason for this decision to close stores comes from the impact of the entrance of international competitors such as H&M, Zara and Uniqlo – which increased pressures on Target – misses some fundamentals.

Had Target held a strong, clear position in customers’ minds, it would have stood a better chance at stemming the flow of shoppers elsewhere. The fact people were switching to these international, middle-market newcomers suggests there was still an appetite amongst this broad demographic for quality, stylish goods at affordable prices. Target simply wasn’t providing that choice – at least, exclusively – any longer.

Without a distinct reason for being, Target’s message got blurred in the muck that is the race-to-the-bottom price competition with other domestic competitors like Big W. Kmart, however, proves that it’s more than just price that maketh the discount department store.

The loss of over 160 stores will no doubt be felt most in regional areas, with Target Country undoubtedly holding a stronger place in customers’ minds and hearts. At a time when many such areas have already experienced several blows in 2020 – the devastating effects of drought, bushfires and a global pandemic – exits like this will be heartbreaking.

In terms of portfolio management, it’s clear that the desire to invest in the Target brand to create a distinct and ownable proposition has not really been there (despite much talk about the need to do so). Unfortunately for Wesfarmers, it makes sense then to divest in the ‘dog’ brand, and focus on the ‘star’.

Meanwhile, the evolution of the Target offering from here will undoubtedly be very different to what we’ve seen before. Had it acted earlier, it might not have been quite such a devastating blow.

Melissa Packham is founder and brand strategist at A Brand Is Not A Logo


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