Target Holding Back Programs for New Year
Cecile Corral -- Furniture Today, November 15, 2004
Looking to stimulate sales during the typically inert post-holiday selling season, Target Corp. is waiting until the new year to unveil two of its new merchandising programs — its exclusive Fieldcrest bed and bath brand, and its newly developed Global Bazaar concept for decorative accessories and furniture, the company reported during is third quarter earnings call late last week.
Gregg Steinhafel, president, Target Stores, described Fieldcrest as a “classic line and a luxury collection” that includes better quality offerings, such as 400-count Egyptian cotton sheets and silk quilts.
“It's exclusive (to Target Stores) and allows us to offer traditional styling and genuine luxury at extremely attractive prices,” he said.
The Global Bazaar “big and bold new concept,” as Steinhafel described it, which is rolling out to all units in January for a period of six weeks, is set to occupy the seasonal space in stores. It features soft and hard decorative accessories and furniture pieces from all over the world — Africa, Asia, Europe, India and Latin America. An example of an item included in this shop would be hand-crafted gourds made by African villagers, Steinhafel said.
“To differentiate our assortment from other retailers, all items are authentic and come directly from the region they represent,” he added. “We have eclectic offerings at affordable prices for these global products.”
For this holiday selling season, the company's fourth quarter outlook remains consistent with its original expectations — a low double-digit percentage growth in total sales, driven in part by an expected increase in same-store sales of 3 to 5 percent.
“At the beginning of 2004 we envisioned stronger finance results in the first nine months, followed by more modest growth in the fourth quarter, as our base of performance becomes more challenging,” said Douglas Scovanner, executive vice president and chief financial officer.
Target's holiday campaign for the fourth quarter is “Get Ready” and focuses on gift giving and holiday traditions. The store's holiday-themed decorative offerings include dinnerware and tabletop, electronics, ornaments, tree skirts and gift wrap. Also, the company has expanded its assortments of “this holiday's most wanted” toys and electronics, among other goods, Steinhafel said.
While last year's fourth quarter proved somewhat weak for the electronics and home décor categories at Target, Steinhafel said this season “we'll probably make some greater gains in those categories that were softer in prior years.”
Optimistic about its rapid online growth, with 70 to 100 percent higher sales and traffic being generated today versus one year ago, the company is stocking up Target.com with about 70,000 items, comprising a combination of products from its bricks-and-mortar sister as well as product exclusive to the website.
And Target is placing more emphasis this holiday on its grocery, food preparation and entertaining offerings at its SuperTarget stores, with special programs like six-serving turkey and ham dinner packages for $39.99 and a 12-inch apple pies for $6.99, as well as exclusive goods like a cheesecakes from Cheesecake Factory, Betty Crocker and Ghirardelli chocolate cookie gift boxes and collectible Coca-Cola sets, among others.
To support this effort, the SuperTarget stores have been outfitted with new in-store signage and a strengthened value method in the produce and baked-goods end-caps with more “two-for” offerings, Steinhafel said.
“Our inventory is in excellent condition as we head into the holiday,” Steinhafel said.
During the third quarter, the product categories that delivered stronger than average same store sales included pharmacy, commodities and consumables, apparel and accessories and footwear. Back-to-school and back-to-college sales were in line with expectations. And the one-dollar program, which rolled out in September to all stores, has proven a successful venture.
In the earlier part of the quarter, the store suffered some mark-down activity, due in part to “slight under-sellings in the second quarter, which is where clearance markdowns came from,” Steinhafel said.
The categories with the highest mark-downs, he said, were: summer seasonal products like toys and sporting goods, some lawn and garden products “that we didn't sell through as cleanly,” and apparel and footwear, “a little of men's and ladies'.”
A total of 46 new Target stores — including 31 new discount stores and 10 SuperTargets, all of which feature the key elements of the P2004 prototype, opened during the past quarter. Currently, 70 units include P2004 prototype features — all of which are performing “above expectations,” said Bob Ulrich, chairman and CEO.
“We are confident that this latest group (of new prototype stores) will meet or exceed our expectations,” Steinhafel said.
Nationwide PrimeTime: Mark Denman talks about competition in the finance industry