SWOT Analysis of Target

by Shamsul
Target SWOT Analysis
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SWOT Analysis of Target

Target is a big American store company with lots of discount shops and big stores. They are based in Minneapolis, Minnesota. Target is the 7th biggest store in the USA. They are also one of the biggest American-owned companies that hire many people in the USA. For educational purpose, we are going to do the SWOT analysis of Target.

Target Corporation started in Minnesota, USA, way back in 1902. They are known for selling a wide range of stuff, from fancy things to regular stuff, all at lower prices. They have different ways to get things to customers, special offers for loyal shoppers, and they always try new ideas and use fancy technology. This helps Target give customers the kind of shopping they like.

The way the organization manages its business carefully has created opportunities for future growth. They also make it easier for customers to buy things by using digital channels.

Now, let’s find out why Target Corporation is so good at competing by looking at its strengths, weaknesses, opportunities, and threats. This will help us understand why it’s a big player in the retail business in the United States.

Company Name: Target

Founders: George Dayton, Douglas Dayton, John Geisse

Founded: June 24, 1902

Headquarters: Minneapolis, Minnesota, United States

Parent Company: Dayton Hudson Corp.

CEO: Brian Cornell (Aug 12, 2014-)

Type: Department Stores

Sector: Lifestyle and Retail

Tagline: “Expect More. Pay less.”

Unique Selling Proposition (USP): Target is one of the biggest discount stores in the USA.

Customers: Consumers looking for high-quality goods.

Target Consumers: Middle and Upper Class

Revenue: 109.1 billion USD (2022)

Net Income: 2.780 billion USD (2022)

Strengths of Target

  • Variety of Products

Target is a place where you can buy everything you need, like medicine, food, fancy clothes, gadgets, sports stuff, and things for your home. They also sell a lot of stuff online. In 2020, when people were buying a lot of essential things because they were worried, Target made a lot of money. Even though they sold less fancy clothes and home decorations, they sold a lot of groceries, food, and other important stuff, and their sales went up by more than 50 percent.

  • Positioning

Target sells stylish, good-quality stuff at lower prices for people who like to stay trendy. Most of the people who shop at Target have medium to high incomes, and their families typically make about 64,000 dollars each year.

  • Amazing Shopping Experience

Target gives customers a better shopping experience than Walmart by having a well-organized store layout, nice shopping carts, a clean and bright store, and clearly marked aisles. They’ve been very successful, especially during challenging times, because they focus on using their stores to quickly get orders to customers. This approach helped their same-day delivery services grow by 278 percent in the Q1 of 2020.

Nearly 90 percent of their online orders are delivered fast from their stores, which shows that Target’s efforts to make customers happy and quickly deliver orders are working well.

  • Designer Clothes

To make customers really happy and give them lots of choices, Target sells fancy clothes in their stores by teaming up with famous fashion designers. About one-fifth, which is 15 billion dollars, of all the money they make, which is 75 billion dollars, comes from selling clothes and accessories.

  • Collaboration with Starbucks

Target teaming up with Starbucks is a smart move because it helps Target sell more stuff since Starbucks brings more people to their stores.

  • Charity

Giving back to the community is really important to Target Corp. They show this by sponsoring programs and making donations. Since 1946, the company has been giving away 5 percent of its profits, which is about 4 million dollars every week, to help local communities with things like educating kids, providing food, getting ready for disasters, and helping when there are emergencies.

  • Efficient Distribution Network

To get most of their stuff to the stores, Target Corporation uses 40 big storage places called distribution centers. They also work with other companies that transport their things to the stores.

  • Strong Presence

Target is a big store in the USA. They have 1844 stores in 49 states, and they have the most stores in California, Texas, and Florida.

  • Effective Management of Inventory

Target uses different ways to make sure they don’t waste products, lose sales, or have to lower prices on things that don’t sell. They use techniques like guessing what customers will want, planning, working with the companies that supply their products, and considering the seasons. In 2019, they started using special software to keep just the right amount of products in stock, so they don’t run out, and their backroom stays organized. Target is also thinking about using robots to help organize things in their warehouses.

  • Digital App

Target made a really good app called “Cartwheel” for people who like to use their phones. With this app, you can buy stuff online, see if a store has something in stock, check how much things cost, find where things are in the store, use coupons, scan things to buy, pay for your stuff, and even manage your credit card.

  • Adoption of Online Channels

In 2020, Target used online shopping really well to make customers happy. They sold a lot more things online, with sales going up by 195 percent in the Q2 of 2020. They also made it easy for people to pick up their orders at the store, use a service called Drive Up, and get things delivered with Shipt. Because of all this, Target made a lot more money, about 25 percent more, which was 22.98 billion dollars in total. Now, Target is one of the top three big online stores, like Walmart and Amazon.

  • Robust Financial Growth

Target has been doing really well for a long time. They have made more money each quarter for 11 times in a row, both in their physical stores and online. In 2019, they made even more money, going from 2.94 billion dollars to 3.28 billion dollars. In 2020, they did even better. Their profit in the Q2 of 2020 went up by 80.3 percent to 1.7 billion dollars. Target has a good plan for making money that will keep working well in the future, helping them make more money and be successful.

  • Efficient Omni-Channel System

Target has spent a long time improving how they get stuff to their stores and see what they have in stock. They have one of the best ways of selling things both online and in their stores. Because of this, they could change their way of selling really fast when they needed to. In April 2020, they sold a lot more stuff online, with sales going up by 282 percent compared to the year before. And most of the online orders were sent from their stores.

Weaknesses of Target

  • Unaffordable Products

A study by Business Insider found that Target’s prices for groceries are about 15 percent higher than Walmart, which is their biggest rival.

  • Data Security of Customers

Target had a really bad situation happen in 2014. Almost 70 million customers had their credit and debit card information stolen. Because of this, Target’s image got hurt, and they had to deal with a lot of lawsuits from customers.

  • Limited Global Presence

Target tried to open stores in other countries, like Canada, from 2011 to 2015. But it didn’t go well, and they had to close all their stores in Canada because it didn’t work out.

  • Store-centric Method

In today’s world of online shopping, retailers need to focus more on selling things on the internet. While Target has done well with online shopping, they’re also seeing fewer people come to their physical stores. They’re selling fewer clothes and accessories, and that’s concerning because these items don’t make them a lot of money. When they sell less of these low-profit items, it affects their overall earnings more.

Opportunities for Target

  • Partnership with CVS Health

In 2015, CVS Health bought Target’s clinics and pharmacies for about $1.9 billion. This means that CVS Health now runs the pharmacy part of Target’s stores. This is good for Target customers because they can get top-notch healthcare services at Target stores, thanks to CVS Health.

  • Small Stores

Target has been opening smaller stores in busy cities and on college campuses. These stores are about 1/3rd the size of their regular stores. They reached their 100th small store in 2019, and by the end of that year, they had made more than 1 billion dollars in sales from these smaller stores.

In 2021, Target will open its first extra-small stores, which are about 6,000 sq. ft., in crowded neighborhoods and on college campuses. They also plan to open nearly 30 new small stores ranging from 12,000 to 40,000 sq. ft. These smaller stores have a lot of potential and can help Target grow for a long time.

  • Loyalty Program

Target can make its REDcard loyalty program even bigger, and that way, they can learn more about what customers like and how they shop. It will also help them know more about customers, so they can send them offers and advertisements.

  • Efficient Delivery

Target bought a grocery delivery service called Shipt for 550 million dollars. This helps them deliver things to your door on the same day, just like Walmart and Amazon. In 2020, Target also started letting people pick up groceries in their car at many small stores to make same-day delivery even better.

  • Diversify Brands

Target can create its own special brands. These kinds of brands make stores different from each other, and they can make more money from them.

  • Enhance Market Position

In 2020, Target opened more stores, going from 1,844 to 1,868 stores. Most of these new stores are really big and have lots of things, like groceries, gadgets, and clothes. About 80 percent of Target’s stores are medium-sized, 15 percent are even bigger, and the last 5 percent are smaller stores.

  • Remodeling of Stores

Even though it might not sound like a big deal, fixing up their stores can make Target a lot more money. Target wants to renovate 300 of their stores, making it 1000 in total. When they do this, each renovated store can make 2 percent to 4 percent more money in the first year and keep making at least 2 percent more in the following years. If all 1000 of their fixed-up stores make about 3 percent more money, Target’s total earnings will go up by a lot. So, fixing up their stores is a big chance for Target to grow.

Threats to Target

  • Competition in the Local Market

Target is in a tough business where they don’t make a lot of money on each thing they sell, and they have big rivals like Home Depot, Costco, Walmart, and Kroger that have many stores near people’s homes. To compete with Amazon in online shopping, Target started their holiday sales early in October and had more deals for November. They have to spend a lot to keep up with the leaders in the industry, which means they won’t make as much money because the competition is tough.

  • Changing Customer Behavior

Target Corporation might have some big problems because more and more people are shopping online. Companies like Amazon are getting even better at delivering things fast to people’s homes. While this could help Target grow, it also means that Amazon is getting really good at handling online orders and delivering them on time. This might make it hard for Target to compete in busy areas.

  • Failure to Serve in New Markets

Target might face a problem if they don’t stand out from the competition. People are starting to prefer online shopping, which is all about finding the cheapest deal and not about loyalty to a particular brand. This could make it harder for Target to keep their customers happy and coming back.

  • Prone to Economic Crisis

Target’s sales are closely connected to how well the overall economy is doing. Because most of their stores are in the USA, if the US economy has problems, it can hurt Target’s business too.

  • Replicable Products

Running a retail business like Target takes a lot of money, but it’s also something other new companies can copy easily. These new companies can sell things for less than Target and steal many customers.

  • Uncertainties in Retail Sector

Many retailers are making less money because the world’s markets are uncertain. While Target hasn’t been hurt too badly, they’re still feeling the effects of this uncertainty. They had to change their predictions and plans for growing. They said they’re going to remodel fewer stores, from 3,000 down to just 300, because they’re not sure what the market will do.

  • Increasing Costs of Running Business

In the first quarter, Target made 64 percent less profit because it cost them more to run their business. Even though they sold more things online, making 141 percent more in sales, they had to spend about 500 million dollars to keep things safe. The extra costs made them earn less money, going from 795 million dollars in the last quarter of 2019 to 284 million dollars in the first quarter of 2020.

To Sum Up

Because lots of people really like shopping at Target and because they sell things to customers all over the world, Target Corporation is known as one of the respected stores in the US. However, it’s important for Target to think about all the important things that could hurt the company. So, this SWOT analysis of Target looks at the good and bad things, as well as the opportunities and challenges that Target faces in its market.


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