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Target faces identity crisis


By ANNE D'INNOCENZIO

NEW YORK (AP) - Target is having an identity crisis.

The nation's third largest retailer was once high-flying, but now it's struggling to find its place in the minds of American shoppers.

Once known for its cheap chic fashions and home accessories, Target faces competition from trendy chains like H&M. The discounter also hasn't been able to ditch the image that its prices on staples like milk are higher than rivals like Wal-Mart. And it's battling the fallout from a massive data breach that has hurt its reputation.

Meanwhile, Target on Tuesday fired the president of its Canadian operations following some missteps in that country. The ousting comes two weeks after the Minneapolis-based discounter announced it was looking for a new leader after the abrupt departure of its CEO.

All of Target's challenges come as the broader retail industry is dealing with a slow economic recovery that hasn't benefited all Americans equally and a move by shoppers away from buying in stores and toward shopping online.

As a result, Target reported its first annual profit decline in its latest fiscal year in five years. Target's first-quarter results, which are slated to be released Wednesday, will offer more insight. And its shares have fallen 10.5 percent this year.

"The nature of the retail landscape has changed," said Brian Yarbrough, a consumer products analyst at Edward Jones. "I don't think Target has addressed the changes well."

Here's a look at the four big issues Target faces:

THE PROBLEM: CHEAP CHIC STRATEGY

Target was the first low-price retailer to team with designers to create affordable lines when it forged a partnership with Michael Graves in the late 1990s. But that niche has been copied by traditional stores and foreign imports like H&M. Analysts say Target took its eye off the ball on its trendy offerings when it focused on expanding its food business since the recession.

Target also has tripped up on some of its designer collaborations. During the holiday 2012 season, its collaboration with posh retailer Neiman Marcus turned out to be a dud as the merchandise was criticized for being too expensive, among other things.

THE SOLUTION:

Target says it's moving more quickly to test the latest items in stores. It also made some personnel changes on Tuesday that are aimed at making it more nimble. "We're getting back to what we were known for," said John Mulligan, Target's chief financial officer and interim CEO said in a recent interview with The Associated Press.

THE PROBLEM: PRICE

Since the economic downturn, Target has battled the perception among tight-fisted shoppers that its prices are too high when compared with rivals. That challenge only increased as Wal-Mart, the world's largest retailer, has pushed its lower prices even more lately.

According to a pricing survey conducted in January by Kantar Retail, a retail consultancy, Target's prices on an overall basket of more than 40 nationally branded groceries like health and beauty items were nearly 4 percent more expensive than Wal-Mart. That lead widened from a year ago when Wal-Mart was only 2 percent cheaper.

THE SOLUTION:

Target has been pushing the "Pay less" part of its advertising slogan "Expect More, Pay Less." Last year, it touted prices on products in holiday TV ads, the first time it had done so in at least a decade.

THE PROBLEM: TECHNOLOGY

Target's data breach late last year, which compromised the credit card and other personal information of millions of customers, exposed big flaws in its security system. Analysts also criticize the company for being too slow in creating a seamless experience for shoppers to jump from physical stores to the web. For example, it just rolled out a program late last year that allows shoppers to order online and then pick up at the store when rivals have been doing that for years.

THE SOLUTION:

Target is overhauling some of its divisions that handle security and technology. It's also been accelerating its $100 million plan to roll out the more secure chip-based credit card technology in all of its nearly 1,800 stores. Beginning in early 2015, Target will be able to accept these payments from all Target-branded credit and debit cards - becoming the first major U.S. retailer that will have its own branded cards with this technology.

THE PROBLEM: CANADA

Target's expansion into Canada with more than 100 stores last year has been fraught with problems. Shoppers have complained that prices are too high, and the stores have been wrestling with inventory problems.

As a result, the company's sales in the country were weak and it recorded a nearly billion loss for the latest year.

THE SOLUTION:

Target said Tuesday that it replaced Tony Fisher, the president of its troubled Canadian operations, with a 15-year U.S. company veteran.

Mark Schindele, 45, who was senior vice president of merchandising operations, will now run the Canadian operation, effective immediately. Schindele, who was senior vice president of merchandising operations, played a key role in launching an expanded grocery area, among other achievements.

Join the discussion

1000|Char. 1000  Char.
saund10449 May 20 2014 at 7:29 PM

If they want a better reputation they might start by treating their employees better. They only hire people for 32 hours a week or less to avoid health insurance for full time workers. Get your house in order Target and then you can worry about your reputation.

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19 replies
craigmacrina May 20 2014 at 8:58 PM

Many of these comments give me a chuckle. Mainly due to the ignorance of the consumer on how retail works. If you live in a crappy part of town with crappy people you are going to find a crappy target in terms of employees, store cleanliness, merchandising standards,....yada yada yada. This can be said for Toys r Us, Kroger, K Mart, etc.. The retail store you shop in is a mirror image of the community. I can show you any retailers stores that are 10 miles apart and the differences would astound you. It is all about people and how they were raised, just like anyone else you deal with day to day.

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10 replies
pets0my2000 May 20 2014 at 8:07 PM

I love Target, will always shop there. Can't stand Walmart...

Flag Reply +37 rate up
11 replies
donnah2622 May 20 2014 at 7:06 PM

I'm 66 and they insist on running a copy of my driver's license to buy a bottle of wine. No way, especially with the security breaches.

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8 replies
fallonfarmer May 20 2014 at 8:09 PM

Mabe people are finally gitting tired of all that made in China crap they are selling.

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6 replies
Mac May 20 2014 at 7:15 PM

Something that I have a difficult time understanding is why do all of the companies store your credit card information ? They keep it on file forever. Charge the product that I am buying to my card and forget me please.

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2 replies
frank.foreman Mac May 21 2014 at 6:43 AM

Of course government funded companies are participating with government to steal your most vital informations and preferably profit from storing them. They also support farmers who spray liquid pig **** on vegetable crops , while they also go along with vegetarian's views. If it can be regurgitated , the government wants a hand in it. Walmart is no better , just more sterile.

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Pammy Annie Mac May 21 2014 at 10:58 AM

Retail stores gather information about their customers by encouraging 'credit cards' or 'loyalty cards'. Pay cash. Cash works and your personal information stays personal. Oh, and no bill at the end of the month. :-) It's a win-win.

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JIM May 20 2014 at 8:55 PM

If they supported our troops more and gays less i might shop there again.

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9 replies
milliebsp May 20 2014 at 7:00 PM

I shopped at Target last weekend, and had to pay full price for everything because NOTHING I wanted to buy was on sale!

Normally, I would wait. But my granddaughter's birthday is soon, and no time to wait, or shop elsewhere. But I was really disappointed that so little of their merchandise was on sale! Considering how bad their reputation has become, I would think their sales would be a LOT better!

I did, however, pay cash because I don't trust them like I used to and, since we were among those who got screwed because of their massive breach, I wasn't about to use my credit card!

I think they need to do a LOT more to bring their customers in!

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8 replies
fcanellas May 20 2014 at 6:52 PM

I no longer shop at Target because of the way they rush you at checkout, before you can get your bags in the buggy they are checking out the next customer. I am older and would very much like for the cashier to put my bags in the buggy before they start checking out the next customer!!!

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11 replies
lizgonzales8186 May 20 2014 at 7:45 PM

I thought I was the only one to notice the change, but several of my friends have found the same changes as I. For ex., the sales are not as customer-friendly as they used to be. Also, I have noticed their prices have gotten higher when compared to other outlets. It seems like they have decided to become a "designer" store in that they are relying on sales of items made by certain designers which are more expensive. People that want low cost designer items are going to T.J. Maxx or Home Goods, not Target. Target needs to go back to the formula they had before because it worked.

Flag Reply +17 rate up
1 reply
jkruse60 lizgonzales8186 May 20 2014 at 9:45 PM

Your payin for the designer name there crap is made in china also,I buy Mark Anthony shirts on the sale rack at Kohls for $15.00 instead of $60.00.and it says made in china on the tag.

Flag Reply +6 rate up
3 replies
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