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Target’s Image Issues

Mini Case
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The St.Gallen MBA Admissions 2013
Case Study Analysis
_________________________________________________________________________________ Published for exclusive use by the University of St. Gallen. It is not permitted to reproduce this material. Introduction to the Case Study Analysis

Dear MBA candidate,
Congratulations on your choice to apply for the St.Gallen MBA! As part of our admissions
process, we would like to get to know you better and get an impression of your analytic
capabilities. For that matter, we ask you to work on this mini case study.
Do not be intimidated by the fact that this exercise focuses on an economic topic, especially
in the case that you have no prior business education. There is no single right solution to this
case, and we do not expect you to deliver a perfect textbook solution. We are more
interested in the way you approach problem sets, your logical reasoning and your ability to
develop a consistent line of argument when it comes to proposing a solution.
Depending on the case setting, you are asked to assess or critique a decision that has
already been made, develop and propose a solution to an identified problem, or make an
actual decision. When working on the case, both the insider’s perspective (manager, CEO,
CFO, employee, etc.) and the outsider’s perspective (financial analyst, consultant,
stakeholder, shareholder, etc.) are an option for the angle of your analysis. Please let us
know what perspective you chose.
Be aware that not all the information is necessarily given in the case, so you can base certain
arguments on assumptions, as long as you introduce them in your analysis.
On the following page, you will find some guiding questions that we expect you to answer in
your mini case analysis. The maximum length of your answers is 500 words.
Here are some tips you can keep in mind when writing your analysis:
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There is no right or wrong answer. Focus more on analytics and logical reasoning Remember that what really happened is not always what should or could have happened Be creative in identifying the scope of potential problems and solutions Chose a role/perspective that you can identify with, and work on the case from that particular angle Try to answer most of the guiding questions in an integrated manner, rather then answering each and every question separately Good luck in the case preparation! The St.Gallen MBA Admissions Team Guiding Questions to the Mini Case

1) What are the potential rewards of Target’s new strategy?
2) What are the risks of this new business policy?
3) What unique advantage(s) would result from the new approach?
4) How attractive is the retail industry?

Target seeks to refocus its image

Barney Jopson
January 12, 2012
Target, the US discounter that brought cheap chic to big box retail, is to open 25 mini Apple
stores within its own shops as sector analysts say it is facing an identity crisis.
The retailer won the faux French pronunciation Tar-zhay from admirers by selling designer
clothing and funky housewares at low prices. But by diversifying more recently into fresh food
and pharmacies, it has diluted its brand in the eyes of some experts.
Ed Little, a retail marketing specialist, said: “They’ve been a leading innovator for so long.
But the general feeling in the marketing world is they’re going through an identity crisis, really
trying to figure out who they want to be.”
At its root lies a tension between two different ways of pulling people through its doors. One
is to become a one-stop-shop where customers can buy everything, including bananas and
ibuprofen; the other is to be a beacon of style not available anywhere else.
“All the emphasis they put now into food is a diversion from the hip, trendy, design-focused
brand personality that they worked so hard to develop,” said Mr Little, who previously worked
at Nordstrom, Macy’s and J Crew.
Target on Thursday signalled an effort to regain the edge once encapsulated by its “design
for all” slogan. It confirmed the partnership with Apple and announced that five small
boutiques – selling products as diverse as antique-style dishes and dog food – would
spearhead its launch of stores-within-stores in May.
Mr Little said: “I think it is a step in the right direction for Target to differentiate and innovate,
distancing themselves from the mass marketers of commodities.” Target did not provide
further details about the mini Apple stores.
The announcement comes during a period of upheaval. Target reported a disappointing 1.6
per cent rise in December sales. Last week, it ended its six-year partnership with Wieden +
Kennedy, its lead advertising agency. It is still without a chief marketing officer after Michael
Francis left last October to join JC Penney.
Asked how food and drugs could sit under the same brand as Apple iPads and Missoni’s
Italian handbags, Stacia Andersen of Target’s home division said: “Our guests expect to be
able to find a wide variety of things. So, while we have food and pharmacy, and that meets
their everyday needs, our job is really to delight and surprise them with new things.”
While a Target spokeswoman said the end of its work with Wieden + Kennedy was not linked
to any one thing, she said: “We’re looking at 2012 to provide a fresh, innovative look.” Target
also announced a $5bn share buy-back plan on Thursday.
Until last year, Apple’s retail division was run by Ron Johnson, a former Target executive who is now chief executive of JC Penney With its mix of clothes and home goods, electronics and music, food and drugs, Target’s competitors range from department stores (which have mimicked its design partnerships) and Best Buy, the electronics chain, to Amazon, the online retailer, and Walmart, the behemoth of discounting. Some analysts said Target’s holiday sales fell short of expectations because it lost customers to Walmart as the world’s biggest retailer by sales moved aggressively to cut its prices amid intense competition. Target’s sale of designer products began with architect Michael Graves in 1999 and since then it has worked with a variety of partners, including Liberty of London and Rodarte, a US fashion label. Its five boutique-in-a-store partners – Privet House, Cos Bar, The Webster, Polka Dog Bakery and The Candy Store – currently run no more than a handful of stores each. Target’s ambitious plan, which it will fund itself, is to give them a place in each of its 1,700-odd stores, but only for six weeks. They will then be replaced by other boutiques. Walter Loeb, a veteran retail consultant, agreed that Target was struggling to define itself and praised the Apple initiative. “Apple stores will attract young customers and that’s the challenge for all retailers today,” he said. “Young customers love to shop in speciality stores and in stores that are convenient. They don’t spend a lot of time in malls and stores where older people go.” Source: http://www.ft.com/cms/s/0/b1c11394-3d47-11e1-b0e4-00144feabdc0.html, accessed January 2012.

Source: http://www.mba.unisg.ch/files/Case%20Studies/MCTargetACSAv001.pdf