Target’s competition with Walmart

  On May 1, 1962, in Rosetown, Minnesota, USA, a chain of daily necessities stores named Target opened. The Target chain chose the location of the store in a typical middle-class neighborhood. It is densely populated and well-developed commerce. The surrounding residents are mostly white-collar workers, well-educated, like a comfortable shopping environment, and are more willing to pay more for quality products. With its precise market positioning, the Target chain quickly expanded to four in the first year of opening.
  In the next two months, a man named Sam Walton opened another chain of daily necessities stores in Rogers Town, Arkansas, in the southern United States. He named the store Wal-Mart after his own name. Compared with Target, the income of residents in Rogers Town, where Wal-Mart is located, is lower. This is determined by the relatively backward economic environment in the southern United States. The population density of Rogers Town is also much lower, only a quarter of that of Rose Town, Minnesota. Despite this, Wal-Mart still did not slow down its expansion. In the following five years, Wal-Mart opened a total of 24 stores in Arkansas, and its annual turnover quickly rose to $12.7 million.

  People at the time did not know that these two unremarkable regional chain stores would grow into the two largest forces in the U.S. daily necessities retail industry. To this day, Wal-Mart and Target still steadily occupy the U.S. daily necessities retail market. The first and second seats. Perhaps, the differences that existed from the beginning determined the different business strategies of the two chains. Arkansas, where Wal-Mart is located, has low per capita income. Emphasizing its price advantage has become Wal-Mart’s consistent competitive strategy. And Minnesota, where Target is located, is relatively wealthy and has a more mature business development. Therefore, establishing an absolute price advantage is not necessary for Target.
  If Wal-Mart uses low prices to “anchor” customers, then Target needs to find ways to “anchor” customers beyond price. Under the continuous expansion of Wal-Mart, Target clearly realizes that it is impossible for him to form a scale advantage like Wal-Mart. As a result, Target found a new way for itself to “anchor” customers, that is: to provide high-quality designer products.
  Compared with Wal-Mart, Target has one advantage, that is, it is good at discovering and selecting excellent designer brands, and working with them to develop products suitable for mass consumers. “Affordable designer brand” is Target’s slogan. Through Target’s huge retail terminal, designer brands can increase their influence and visibility in the mainstream market and further increase product sales. Target can enhance its image of “high quality” in the eyes of customers by cooperating with designer brands.
  Mosimo is a youth clothing brand headquartered in California, USA. It was founded in 1986 by the Italian Mosimo Gianuri. According to the brand founder Gianuri, Target has almost all the characteristics of a partner that Mosimo needs: Target’s more than 1,000 stores across the United States have solved the problem of sales channels for Mosimo; Its mid-to-high-end consumer group has also alleviated Mosimo’s pricing pressure.
  At the same time, Target also has strong and agile production and processing capabilities. In the cooperation with Target, in addition to providing design and brand image, Target is responsible for other production, processing and transportation links. This means that while driving sales, Target can also save Mosimo’s production management costs. After three years of preparations, in early 2000, a series of products called “Mossimo made for Target” began to be sold on Target’s clothing unit.
  Through Target’s huge retail terminal, Moses has achieved large-scale sales in more than 1,700 stores across the United States. At the same time, through the cooperation with Mosimo, Target also introduced personality, aesthetics and fun into a category that is generally considered to be unremarkable-supermarket clothing.
  The clothes sold in supermarkets are generally of average quality, mediocre styles, and there is no special fashion at all. But after introducing the works of famous designers, Target completely changed people’s understanding of supermarket clothing. At the price of a supermarket, you can buy designer clothes, which is a new “anchor” for all customers. In fact, when people become accustomed to buying designer brand products at supermarket prices, will they still be willing to spend the same amount of money to buy “non-brand designer” products in other supermarkets?
  In addition to cooperating with well-known designer brands, Target’s shopping environment is also significantly better than Wal-Mart. Target’s shops are always brightly lit, the products are neatly laid out, the floor is clean, and the prices of various products are clearly marked. As we all know, most stores make full use of their storefront space to display products and increase sales. But Target does the opposite. It requires managers to ensure a distance of 12 feet (approximately 3.66 meters) between the shelves when arranging the shelves to ensure that customers have enough space to select goods and pass.
  Target’s idea is clear: When the shopping environment is comfortable, customers are naturally more willing to slow down and extend their shopping and stay in the store. And the longer you shop, the more likely customers are to buy more things. In the words of Target’s CEO at the time, Bob Ulrich, Target was to run a supermarket with the philosophy of operating a department store.
  Under Target’s re-anchoring, people’s shopping habits have also quietly changed. After gradually adapting to Target’s designer brand and comfortable shopping environment, returning to Wal-Mart to buy things becomes less pleasant, and even, for some people, it becomes a pain.
  A Korean friend of mine was once a loyal customer of Wal-Mart. Later, there was a Target opposite this Wal-Mart. After shopping several times, she told me not to go shopping at Wal-Mart again. I still remember her angry words: “(Wal-Mart) always reluctant to turn on the lights in order to save electricity. Every time I come back from shopping, I often get tired and my eyes hurt. There are always piles of boxes and clothes on their aisles. Shelves are all over the floor. The most unbearable thing is that their clothes are often trampled on with shoe prints. You say, who likes to buy things in such a place? ”
  Interestingly, there is no Before going to Target, I never seemed to be dissatisfied with Wal-Mart.
  According to statistics, the average annual household income of shoppers who consume in Target is about 50,000 US dollars, while in Wal-Mart, the average annual household income of customers is only 30,000 US dollars. In Target’s parking lot, customers who drive Mercedes-Benz, Land Rover or Jaguar are often seen, and these customers usually do not go to Wal-Mart to buy things.
  From the battle between Target and Wal-Mart, we can see that “anchoring” is not limited to price. When we can interpret shopping activities three-dimensionally and comprehensively, we will discover more ways and means to “anchor” customers. For example, Beijing’s Contemporary Mall, when most shopping malls do not provide unreasonable returns and exchanges, it proactively launches this service to give customers more protection after consumption. This approach will also have an “anchor” effect: when customers gradually become accustomed to the unreasonable return and exchange service of Modern Mall, it becomes unacceptable that other stores do not accept returns and exchanges. It can be seen that the “anchor effect” is not limited to the price level. Fundamentally speaking, people’s expectations for shopping experience, product quality, and even after-sales service can be “anchored” again.

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