Target: 50% Larger by 2017?
This is exactly the type of news we expect to hear from a company which has its eyes set on major growth in the coming years. By 2017, the discount retailer expects to drive $100 billion or more in sales, up from $67 billion in 2011, and that will require selling more than just a few extra bananas and cleaning supplies.
How does it plan to do it?
Target's near-term strategies focus on the further enhancement of recent guest experience efforts, including the 5% Rewards program and store remodels.
Since its launch in the fall of 2010, Target's 5% Rewards program has been giving loyal guests yet another reason to choose Target over competitor Wal-Mart (NYS: WMT) . Target now offers a 5% discount on almost all items when guests use their Target REDcard credit or debit card to complete a transaction. This has resulted in an increased number of issued cards, as well as higher usage by existing card members.
And, just two months ago, Target announced that card members will additionally receive free shipping on all Target.com orders, with no minimum spending limit. This could take some business away from Amazon.com (NAS: AMZN) , which requires you to spend a minimum of $25 or pay for a premium membership to qualify for free shipping. Amazon has leveraged a fair amount of their success on their free shipping program, and they can't be happy to see so many other retailers mimicking the experience.
Target guests have also embraced recent store changes, most notably the expanded grocery section, with a larger selection of frozen and dry goods and the addition of fresh fruit, dairy, and meat products. By combining fresh and healthy food choices with everyday value, Target hopes more happy customers will make Target their one-stop shopping choice. Target has remodeled about half of its stores in the past three years, with plans to update more locations in the future.
Target's longer-term strategies focus on major market expansions, including the addition of CityTarget and Target Canada.
CityTarget, a smaller, urban-format store, will open in four major U.S. cities this year -- Chicago, Seattle, Los Angeles, and San Francisco. These new stores will feature fewer but more-tailored items than their current generalized stores. The results of these pilot locations will help determine the future expansion of CityTarget to other U.S. cities.
Target is also expanding into Canada, with plans to open 100 to 150 stores throughout the country in 2013 and 2014. And its transition over the border may be easier than you think. Through extensive market research, Target discovered about 70% of Canadians are already familiar with the Target brand, 11% have shopped at a Target store in the past year, and more than 30,000 are already REDcard holders.
So there you have it.
Target has big goals for the next five or six years, but it also has some solid plans for reaching those goals. Is it enough for 50% growth? Time will tell, but I like its odds.
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At the time this article was published Robyn Bigler owns shares of Target, but no other companies mentioned. The Motley Fool owns shares of Wal-Mart Stores, Amazon.com, and Apple.Motley Fool newsletter serviceshave recommended buying shares of Wal-Mart Stores, Amazon.com, and Apple.Motley Fool newsletter serviceshave recommended creating a diagonal call position in Wal-Mart Stores and creating a bull call spread position in Apple. The Fool has adisclosure policy.
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