Designer collections, plastic carts, and that bright red color: How Target gets you to spend money

How Target gets you to spend money

Earlier this year, Target became the seventh-largest retailer by sales in the U.S. It had a whopping $78.1 billion in revenue in 2019, and despite difficulties presented by the coronavirus pandemic, profits rose more than 80% year over year in the fiscal second quarter of 2020 with record online business.

Since its debut in Roseville, Minnesota, in 1962, Target has grown to 1,880 stores across all 50 states and now has a devoted fanbase who lovingly refer to the brand as "Tarjay." 

How does Target keep its shoppers hooked? The retail giant has revolutionized the shopping experience. From the width of the aisles to the placement of dollar bins, everything is carefully designed to entice customers.

"Expect More. Pay Less" has been Target's slogan since the mid-'90s. One of the key ways the company breeds loyalty and excitement is with its popular private labels and designer collaborations. 

Target began working with high-end designers like Isaac Mizrahi and Vera Wang in 1999, and its popular private clothing lines A New Day and Cat & Jack now account for $1 billion and $2 billion in annual sales, respectively.

"They have one of the best private-label strategies of any retailer in the United States," says Bob Hoyler, senior analyst at Euromonitor International. "They're the envy of even Amazon when it comes to their private-label strategy in apparel." 

Neuroscientist and marketing expert Terry Wu says the anticipation of these lines can even create a physiological response, giving customers a dopamine rush.

"That surge of dopamine actually drives us to go back to Target, to buy again and again," Wu says. "This is how they build loyalty."

And once you're in the store, strategic design elements keep you engaged. From the dollar bin right at the front, which one frequent shopper calls "dessert" because she says "there's always something I never knew that I needed," to lightweight plastic shopping carts that are easier to push around than metal ones, and its signature red and white color palette, making it look bright and clean and easier to spot employees.

"Target has been able to elevate what's at the end of the day, just a general merchandise, big-box retailer," says CNBC.com consumer and retail reporter Melissa Repko.

Watch the video above to learn more about Target's marketing secrets, including why the company partnered with Starbucks.

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