Target to downplay discretionary categories
By Staff -- Gifts and Dec, 2/26/2009 2:34:00 PM
MINNEAPOLIS—Stung by double-digit drops in its Q4 and full year 2008 profits and with comparable store sales slipping, Target said this week it would increase shelf space for non-discretionary product categories in a play for cash-strapped shoppers' must-make purchases.
In the retailer’s quarterly earnings call for analysts on February 24, Kathryn Tesija, Target’s executive vice president of merchandising, said the retailer would “allocate more shelf space to non-discretionary categories such as food, household, personal and baby and health and beauty products”—particularly in its new or remodeled stores.
The impact the effort will have on Target’s toy selection was not addressed. Tesija did say Target planned “a stronger presence” for Circo—its exclusive brand for kids—“across all merchandise categories” as part of an effort that will see the retailer consolidate its several house brands.
Other moves include greater efforts to improve shoppers’ perception that its prices are closer to those of Wal-Mart than generally believed and to increase the use of single price point end caps.
“Current economic conditions have created a fundamental shift in shopping behavior as consumers seek ways to stretch their dollars and pull back on their purchases of discretionary items.” Tesija said. “In this environment, Target is keenly focused on delivering a merchandise assortment and experience that meets our guests’ evolving expectations for price, quality, newness and convenience without compromising core elements of our brand … To remain relevant to our guests and achieve our financial goals we are focusing our attention on initiatives that increase shopping frequency and help guests understand the exceptional value and quality of every Target trip.”
On Tuesday, Target said its earnings fell 41 percent in the fourth quarter to $609 million, or 81 cents per share, while sales slipped 1.6 percent to $19 billion on weaker same store sales, off nearly 6 percent. For the year, the retailer's net income fell 22 percent to $2.2 billion, or $2.86 per share, despite a rise in sales worth 2.3 percent. Same sales for the year increased just under 3 percent.
The retailer also announced it would open 27 new stores on March 8, including its first two stores in Hawaii. Of the new locations, 21 are general merchandise stores and six grocery-enhanced SuperTargets.
I try to never buy anything at Target. It is much better for my city if I shop at local businesses. Sometimes I will deliberately choose to spend a little bit more on a household item just to keep my spending local. Target is based in Minneapolis so I assume that is where they offer their highest paying jobs.
David Correa - 2009-03-04 13:09:00 EST
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