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Target

Priming a business for growth

Target, the second-largest discount retailer in the United States, is renowned for acting more like an innovative upscale boutique rather than a traditional discount retailer. This strategy – high quality products at low prices – had set them apart from others who focused solely on price, and made them the second-largest discount retailer in the US.

Now they had ambitious plans to grow their revenue from $50 billion to $150 billion. But they also had an unruly portfolio of over 240 brands – the result of merchants acting independently to create new own-brands, in the absence of a strategic brand architecture. Consequently, while there seemed to be incredible richness and choice, the own-brands were not driving loyalty and frequency. Customers were confused, with research showing that only 32% could correctly attribute Target’s own-brands to the right company.

A framework for decision-making and innovation

Our first task was to work with Target’s senior management to define the essence of the Target master-brand, as a set of principles to guide their own-brands. We then analysed the hundreds of existing brands and labels, spending time with customers at stores and in their homes, and completing a market basket analysis of customer shopping patterns.

What we found was a fragmented mass of products, lacking coherence and relevance to customer lives. Based on this, we recommended that Target manage fewer, bigger, better brands, and created a strategic framework that categorised brands based on their: relationship to the master-brand; role in customers’ lives; scalability throughout the store; and potential profitability.

Our unique approach to superior design and exceptional value, combined with the consistent execution of our strategy, helps us create the excitement Target guests expect and the shopping experience they love.” Target 2006 Annual Report
Everyday optimism

We also gave Target a range of recommendations to simplify and upgrade their own brands. One core insight was that Target had the opportunity to energise its presence in everyday items by creating a new, vibrant brand to meet their female customers’ needs. On the back of this we recommended they create a new brand for all Target products in cleaning, beauty, personal care and pharmacy.

We then conducted quantitative and qualitative analyses, to understand the competitive landscape, consumer needs and Target’s unique advantages in the consumables category. From this we discovered that no retailer was providing consumables that delivered on three critical customer needs of value, ease and connection – a position that Target could credibly own.

These learnings led us to create the strategy of ‘Everyday Optimism’, which was about bringing a helpful, positive attitude to daily purchases. We brought this to life with the brand name ‘up & up’, supporting it with new packaging design, messaging strategies and in-store execution.

Our guests are savvy and know they don’t have to spend a lot to get high-quality products…by re-launching Target brand as 'up & up', we’re able to create a unique identity for this powerful own-brand. The new packaging incorporates an element of design, giving us the opportunity to deliver on both the ‘expect more’ and ‘pay less’ sides of our brand promise.” Mark Schindele, Senior Vice President of Merchandising, Target
Up, up and away

'up & up' now includes over 800 everyday essential products from across the store – across more than 40 categories, including household, healthcare, beauty, baby, and personal care. Nearly 100 items were introduced for launch, including new categories such as cotton balls and swabs, laundry detergent and baby food.

Our work helped make Target one of the most valuable retail brands in the US. In 2009, the 'up & up' brand registered a 14% increase in comparable sales. And by July 2010, comparable sales were 21% higher than the previous year.