‘Always had a problem’: Why Target couldn’t compete
As news broke that Australian retailer Target will be shutting half of its stores under a major restructure of the struggling discount department store chain, experts say poor marketing is to blame for the downfall.
The announcement made this morning will see as many as 167 Target stores closed or rebranded to Kmart stores in a massive shake-up to the Wesfarmers retail empire.
But Judy Sahay, managing director of marketing company Crowd Media Group, said it comes as "no surprise" and that they had a "misunderstanding" of their target audience.
"When you look at Kmart, it's very clear who they are and what they stand for. Their key messaging is on point," Ms Sahay said.
"Kmart is a discount department store, affordable products for the everyday person. Their target market is Millennials, young families or even a little older."
Associate Professor Nitika Garg from the School of Marketing at UNSW agrees and said Target has always "had a problem" in the market and failed to set itself apart from expensive and discounted retail stores.
"Target has always been in the middle of Kmart and Big W stores for people who are more budget conscience, and on the other end you have Myer and David Jones if somebody wants to spend a lot on a reasonable brand," Prof. Garg said.
"The problem with Target is they were trying to be the middle in these two ends and were trying to brand themselves as being not as expensive as the others.
"They even had their own fashion line and that strategy was confusing for consumers and the coronavirus has aggravated this issue."
Australian Retailers Association CEO Paul Zahra said retail has always been a "dynamic industry" and as a result has an ongoing changing landscape which includes reducing their "physical footprints" and investing heavily in digital.
"Major closures of physical stores is a significant change and is always painful to the people involved," Mr Zahra said.
"Whilst we are heartened that there are opportunities to redeploy staff across the broader business, we regret any job losses for retail workers at this difficult time.
"Retailers have an obligation to make tough decisions at this time to ensure their ongoing financial viability, which will allow us to protect retail jobs in the longer term."
For Kmart, the discounted retail chains "bigger service offering" also made it appealing to customers looking for their "one stop shop" which was made even more successful with their "strong marketing strategy".
"If you look at their marketing it's very clever. Not just online but also in store. They often have commercials that target one of the most influential market segments - young mums who are digitally savvy, always looking for discounts and smart savings," Ms Sahay said.
"Kmart's multi - channel marketing approach of both offline and online, as well as their targeted messaging to each demographic have allowed them to succeed in this digital area."
With more than 1000 jobs expected to be axed by the closure of Target stores, Ms Sahay said the department chain should have focused from the beginning on their marketing strategy.
"They are in between- not cheap and not expensive and that's a dangerous zone to be in. Because if people are not buying on price they are buying in value and Target makes no mention of value, quality in their marketing strategy," she said.
"Their marketing strategy also doesn't relate to their target market always. For instance the ads often have a much older woman say 60 and over trying to sell business attire.
"Their marketing is not diverse and is not focused. Their messing is lost."
Originally published as 'Always had a problem': Why Target couldn't compete