New Target program guarantees unbeatable prices

May 12, 2009

DISCUSSION TOPIC

Target Revives Dropped Price-Matching Program 5/12/09

TOPIC SUMMARY:

Target dropped its price-matching program in 2002. That, as they say, was then because now it looks as though the retailer may be on the verge of bringing it back. Target has tested the program in two markets since March 15 and began a third in its own Minneapolis backyard on May 1.

The retailer has been matching lower prices in its competitors’ ads at 22 stores in the Orlando area and 28 others in Denver for the past two months. The chain rolled out its “Unbeatable Prices. Guaranteed.” program in Minneapolis and Medina earlier this month with the expectation that it will result in a national expansion of the price-matching initiative.

Target believes it has figured out a way to get around the problems it found in 2002. Then, competitor prices were verified at the checkout, causing delays at the front-end. Now, all pricing will be verified away from the checkout at the store’s service desk.

Delia McLinden, a spokesperson for Target, told the Minneapolis Star Tribune that the program was being retested because they “want to speak boldly about value and low prices and give customers peace of mind.”

The Minneapolis/St. Paul Business Journal pointed out in an article that “Target has been ratcheting up its emphasis on prices for the past year, as consumers cut back on discretionary purchases during the recession.”

Discussion questions:  How much will Target’s “Unbeatable Prices. Guaranteed.” program help it achieve a stronger price image with consumers? Does a program like this risk diluting the equity Target has built for its brand over the years?

My post: 

I have always been a big fan of Target.  I am “one of those” who avoid Wal-mart if at all possible due to the feel of the place.  Target provides good prices (even if not as low as Wal-mart) with nice ambience and some really cool product via their focus on design.  Unfortunately, they have drifted in the last few years and lost some of their message.  It didn’t change my enjoyment of the shopping experience there but clearly Wal-mart gained share as they stayed true to their low price message and dealt with much of their bad publicity.

I haven’t seen the new price-matching program in action, but I will assume the two test markets have shown strong results or they wouldn’t be expanding the program.  Target is known for execution, so I will assume they have the bugs worked out of dealing with the customer requests.  I think the marketing message is right for the times and as long as they keep to their design ethos, it will prove to be a good move.

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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Go to the full discussion at RetailWire.com:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13736

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Wal-Mart joins the quarterly results group

May 9, 2009

DISCUSSION TOPIC

Wal-Mart Ends Monthly Same-Store Sales Report 5/8/09

TOPIC SUMMARY:

Wal-Mart is not the first retailer to decide against reporting monthly same-store sales numbers but being the biggest means it is going to get a lot of attention for doing so.

Tom Schoewe, executive vice president and chief financial officer for the company, explained the decision in a press release. “At the start of this fiscal year, Wal-Mart revised its approach to providing guidance for sales. We went from providing guidance for monthly sales to forecasting a guidance range for our U.S. businesses for the full 13-week period. Moving forward, we will no longer report monthly sales. We will provide comparable store sales results on a 13-week basis, along with guidance for the upcoming 13-week period. And, we will release this information during our scheduled quarterly earnings calls.”

Discussion questions:  What are the ramifications of Wal-Mart Stores decision to not report same-store sales on a monthly basis? Does reporting monthly adversely affect retailers that do it?

My post: 

I applaud the move.  The addiction to monthly results by both shareholders and Wall Street pundits detracts from any retailer’s focus on the long term viability of the business and on improving the customer experience.  I’ve watched too many retailers make terrible short term financial decisions simply to prop up monthly comps and even quarterly earnings per share results.  While it would be more difficult for the casual investor, I would like to see focus on quarterly comps (which Wal-Mart is doing here) and semi-annual earnings per share in order to allow the retailer to focus on strategic long-term results.

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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Go to the full discussion at RetailWire.com:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13731

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Wal-Mart to the Rescue?

January 30, 2008

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RETAILWIRE DISCUSSION TOPIC

Economic Downturn? Wal-Mart to the Rescue– 1/30/08
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TOPIC SUMMARY:

While much of the retail industry is hoping that Congress will pass a stimulus package that will get consumers shopping again, Wal-Mart is looking to jumpstart spending with a price rollback of 10 to 30 percent on thousands of items in its stores and on its website.

Discussion questions: How effective will Wal-Mart’s latest rollback public relations effort be in driving traffic to its stores and grabbing market share in the short and longer term? What will be the response from Wal-Mart’s competitors? Can they handle a prolonged price war with Wal-Mart?

My post:

During market downturns, companies with strong cash reserves invest heavily in building market share.  This is what Wal-Mart is doing, and capitalizing on its leadership as a “low price leader.”  The move is smart, timely, and most importantly it is congruent with their vision and mission.  Weaker competitors will suffer more than stronger ones, but Wal-Mart’s move will certainly challenge all purveyors of consumer staples – as they always have.

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

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GO TO THE FULL STORY AND DISCUSSION:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/12723  

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