POSTED ON March 24, 2017
Target Doubles-Down on the Physical Store

In retail, relevance is everything. This week we saw Sears finally admit it is doomed, and we heard Target’s CEO present a commitment to innovate and invest in their physical experience, stating “We’ve got to reimagine that store experience,” adding, “Today’s millennial shopper doesn’t enjoy shopping one of our tired stores that hasn’t been touched in 10 years.”

For nearly a generation, Sears has committed serial acts of neglect to their stores and shopping experience, betraying their loyal shoppers and squandering their brand value. In light of this, Target must invest in keeping their fleet seaworthy, and it appears they have recognized the physical store is the core of their relevance.

Target CEO Brian Cornell’s announcements about new store prototypes that address differing trip types, new urban formats including a Herald Square flagship, and investing in new exclusive brands sound ambitious, but necessary. Target plans to remodel their current fleet of stores (many of which are 10+ years old) as well as fuel their new, smaller-format stores in urban areas.  The company will commit $7 billion over the next three years to this effort.

Integrated Mobile experiences, e-commerce and “BOPIS” still require that shopper’s prefer the retailer first.  The store experience is the convincer, and engaging with technology and new ideas will follow.

WE BELIEVE THAT STRATEGIES EMPHASIZING SEDUCTIVE TECHNOLOGY BEFORE KEEPING THE STORE ENVIRONMENT ITSELF APPEALING AND RELEVANT ARE SOLVING RETAIL CHALLENGES IN THE WRONG SEQUENCE.  

This is where Sears made bad choices. Will Target be successful? Capital improvements in brick and mortar retail require time to impact the chain broadly, so smaller moves with promotion, pricing, and product will need to account for shorter term gains. Also, both technology and shopper behavior are fast moving targets. Agility is key to keeping up so new designs will need to build in flexibility. But the fact that the store is central to Target’s strategy is significant in this time of e-commerce “crushing” traditional retail capturing headlines.

Ultimately Target needs to invigorate their proposition, and trendy ads that drive shoppers to dingy stores only threaten the brand’s credibility. They achieved brand worship due to their democratization of cool and accessibility to more for less. This point-of-difference has lost its uniqueness. Hopefully a new exciting brand promise and the store experience will align and invigorate sales.

Lastly, the idea that they are spending billions on new brands to have exclusive product is smart. How these new efforts build upon the overall Target brand is important, and how they make the store experience unique is critical. These brands need to have influence beyond the shelf and become platforms for new retail experiences. And cool brands have an expiration date, so Target must continue to not only launch brands, but nurture them to make sure they keep Target continuously refreshed.

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