Target's new Target is unveiled
May 26, 2003,
Target will unveil a general merchandise single-entry prototype store for "the next century," Robert Ulrich, chairman, said last week following the company's annual meeting here.
The fall openings will include stores in the Minneapolis-St. Paul market and, by next spring, will involve units in the Greatlands and SuperTarget formats, Steinhafel said. Doug Scovanner, executive vp and cfo, said the prototype is a "change by evolution. It's not something the [customers] would recognize."
Merchandise alterations such as these are normal, said Gerald Storch, vice chairman.
Steinhafel said no new brands have been announced in home, although the merchant continues to seek opportunities. Target has dropped the Philippe Starck line because it failed to perform up to expectations, he explained. However, the retailer is pleased with the Swell launch from Cynthia Rowley, he added.
Steinhafel said home continues to perform reasonably well, given the difficult market.
During the meeting, Ulrich said the merchant's store base will increase by 100 Target and SuperTarget units this year, as well as four regional distribution centers. It will also add two import warehouses this year, and he added that Target wants to "convert more indirect imports to direct imports."
After the meeting, Scovanner said that the SuperTarget format has been successful in attracting the same guest that shops Target, and in areas where a SuperTarget replaces a discount store, the guest frequency increases 50 percent to 100 percent.
Steinhafel said that he believed that reverse auctions "enabled them to secure market-level pricing," as well as access to vendors it may not know about otherwise. "The process has very high integrity, and qualified vendors worldwide can now participate." It is, however, a small percentage of the negotiating process.
Target's department stores — Mervyns and Marshall Fields — still provide the company with "a lot of value," Ulrich said. "And they give us scale."
Marshall Field's is addressing a more lifestyle approach, added Linda Ahlers, president of the division. It's looking for simpler home furnishings like the recent Thomas O'Brien introductions. Soon, about one-third of the merchandise in the Chicago flagship store will change, with boutiques being added to create a store-within-a-store feel, she said.
Its top doors will receive another version of these changes, and then the rest of the chain, evident from starting in September. The division will also significantly enhance and expand its Web site next year, according to Storch.
"We think it can be the most exciting department store in the world," said Ulrich.
Though Mervyn's president Diane Neal was absent, Ulrich said that that division is strengthening its core categories and has a major Hispanic strategy.
Target is also satisfied with its credit card business, which it operates appropriately and conservatively, said Scovanner. "It's profitable after all the costs and expenses, including writeoffs, are taken out. Ultimately, performance matters."
With nine million cardholders and $4 billion in receivables in 2002, Ulrich mentioned during the meeting that "we think it will contribute for years to our growth."
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