Consumer Nation
- Six Pack: Beer Buzz of the Week
- Time for Flash Sales to Adapt or Die
- What Flash Sites Are Suggesting About Consumers
- Building a Beer Brand, One 'Like' at a Time
- The Six Pack: Beer Buzz of the Week
- Wal-Mart's Strong Earnings Overshadow Bribery Allegations
- Lesson for JCPenney: Consumers Are Addicted to Deals
- Fuel Prices Trump Unemployment as Risk to Retailers: Study
- The Hot Beauty Product You Never Heard Of
- The Six Pack: Beer Buzz of the Week
RSS FEED
MOST SHARED
- Greece Pours $22.6 Billion Into Four Biggest Banks
- Europe Has Wall Street's Bull on a Short Leash
- Greece to Leave Euro Zone on June 18: Wealth Manager
- Spain's Borrowing Costs Near Danger Level: Bailout Next?
- Winemaking Lures the Wealthy, But Not With Profits
- Collectors Wary Of Investing In Josh Hamilton
- The Shortage of Women Billionaires
- 5 Spots Where the Dollar Buys a Great Vacation
- 10 Ways to Save Money by Spending More
- A New Look at the ‘New Poor’
- Six Pack: Beer Buzz of the Week
- Greek Exit Could Trigger 50% Fall in Euro Stocks: Analyst
- Under Pressure, FHA Skews to Wealthier Home Buyers
- Big Stock Upside for Hudson City Deal: Analyst
- 5 High-Yield Stocks Ready to Boost Dividends
- Yoshikami: Four Things You Need to Know About Gold Now
- Steinbock: The Euro Zone Endgame Begins
- Option Bulls Take Another Shot on Idenix
- Spain's Debt Costs Near Danger Level: Is Bailout Next?
- US Markets Will Be Watching Europe—And Jobs Report
- European Companies Plan for Greek Unrest and Euro Exit
- Public Pensions Faulted for Bets on Rosy Returns
- Greece to Leave Euro Zone on June 18: Wealth Manager
- Italy 2-Year Borrowing Costs at Peak Since December
- Euro Bond Wins Supporters, but Details Remain Vague
- German, UK Bond Yields Will Go Even Lower
- Labor Board Member Resigns Over Leak to GOP Allies
Off Target?
Text Size 
Correspondent
If you've been into a Target store the last couple of weeks, you may have noticed some space set aside for "The Great Save." This is Target's [TGT
Loading...
()
] experiment with bulk sales you might find at Costco [COST
Loading...
()
] or Wal-mart Stores' [WMT
Loading...
()
] Sam's Club.
 |
Photo by: Patty Edwards Patty Edwards, of Storehouse Partners, said she found a lot of depressing-looking open shelf space in her visits to Targets in Seattle neighborhoods. |
The results are leaving most analysts unimpressed.
"I walked into Target, looked at what they had set up, and frankly was incredibly disappointed," says Patty Edwards of Storehouse Partners.
Edwards snapped the photos you see here. She visited two Targets on more than one occasion in Seattle neighborhoods where the stores are popular. Bins in the warehouse-style area were not even half full, and there was a lot of depressing-looking open shelf space.
As for customer? "There was no one in the area, it really was not appealing," she says.
Edwards credits Target with recognizing the need to evolve, but "bottom line, the execution is not there." She says warehouse clubs have three advantages Target does not have:
1) membership fees help Costco and Sam's Club and BJ's Wholesale [BJ
Loading...
()
] afford thinner margins on merchandise, so they can charge even lower prices.
2) discount stores like Target can have anywhere from 50,000 to 150,000 different items, while warehouse clubs have 4,000 items that have been heavily edited through years of experience.
3) warehouse clubs have cut long-term deals with manufacturers for special packaging to sell more of one item or put in extra add-ons.
Richard Hastings, a consumer strategist at Global Hunter Securities, isn't a big fan of Target's strategy either, although he has feared that Target shoppers could migrate to Costco. "TGT has a lot of work ahead of them."
But Citigroup's Deborah Weinswig sees it differently. "The Great Save is doing 4x the sales volume of Global Bazaar, the event it replaced," she writes. "We believe this event has drawn traffic away from the supermarkets, and we expect TGT to make the Great Save permanent."
 |
Photo by: Patty Edwards Membership fees may help warehouse stores like Costco to afford thinner margins on merchandise. |
Meantime, Weinswig believes Target shares could shoot up later this week after the company updates analysts Thursday on its "P-fresh" initiative, the remodeling of stores to sell more groceries.
Citi expects that stores that have already remodeled are seeing same-store sales growth in the mid-single to mid-teen range.
Jan Rogers Kniffen, who runs his own financial and consulting company for the retail sector, says you can look at Target's warehouse experiment as both a success and a potential failure. He says both Patty Edwards and Deborah Weinswig are right.
"How can both be true? Target has to sell 'cool'. They cannot compete with Walmart on price...(but) all of that was blown away in the downturn. They have lost their mojo."
In other words, four-times the volume of the Great Bazaar is accurate, but four-times of not very much is still...not very much.
We've asked Target about how the concept is doing and will update with any information the company may give us.
Update from Target: Target's Jana O'Leary tells me that "sales are exceeding expectations" in the Great Save area of Target stores. "Anecdotal feedback from guests is extremely positive...they appreciate the one-stop shopping." While the company will not break out specific numbers, O'Leary says Target is "pleased with the early results." However, she says it's too early to say whether Target will bring back warehouse-style concept next year to again replace its seasonal Global Bazaar.
More from Consumer Nation:
- Want to Know How Tiffany's Sales Will Fare? Watch the Market
- En Garde, Retailers... P&G TAkes Products Direct to the Web
- Costco Says Hold on a Minute, or 24 Seconds
Questions? Comments? Email us at
Data is a real-time snapshot *Data is delayed at least 15 minutes
