America’s third-largest retailer is not exactly living up to its name, as it searches for a new sales identity amidst a drop in earnings.
The Minneapolis-based discount store, Target, reported a 16 percent decline in its first quarter earnings earlier this week, and experts have pointed out that the retail giant is not adapting well to industry changes.
Along with an increase in online shopping, trendy chains such as H&M have given Target stiff competition in the cheap chic fashion world.
Likewise, the staple items Target offers, such as milk and bread, are cheaper at major grocery chains like Wal-Mart.
A recent data breach at Target has also created more problems for the discounter.
Target’s administrative landscape is apparently changing as quickly as the retail industry. Earlier this week, the company fired its president of Canadian operations after some business decisions went awry north of border. This comes shortly after Target’s CEO took a hasty exit following the data breach problem.
Retail industry experts have analyzed that America’s recent economic recovery has been slower for some consumers, which, as a result, may have affected sales at Target.
Consequently, this has lead to Target’s first annual profit decline in over half a decade. Additionally, the company has projected second quarter earnings to be well below what industry insiders expected.
A large problem Target faces involves its strategy to sell cheap-chic items. In the late 1990’s, the company broke the ice on affordable lines with its Michael Graves partnership, but Targets’ recent flirtations with food items has taken the company’s eye of that niche.
Furthermore, recent collections the company has released have turned out to be duds, particularly the Neiman-Marcus line released during the 2012 holiday-shopping season.
To fix this problem, Target officials have stated that they intend to go back to strategies that made the company successful.
High prices have also persuaded shoppers away from Target, as cheaper items can be found at larger retail chains across the country. However, Target has been advertising its “Expect more, pay less,” strategy to help ameliorate this trend.
The most pressing problem Target faces, though, is the integrity of its security system, which last year was breached, exposing millions of its customers’ financial information.
Mix that in with a slowly forming online shopping experience, and Target has not done well in the technology department, which is imperative in this day and age of e-commerce.
In response to its technological problems, Target plans on overhauling its security system by implementing a $100-million reboot of its 1,800 stores’ credit card systems.
Target plans on becoming the first major retailer to have its own branded credit cards in 2015, which the company hopes will alleviate any consumer fears on financial security at the store.
