The Target Squeeze: Chain Battles Foes From Above and Below

NEW YORK — Unfortunately for Target Corp., discretion is not the greatest part of value.With Wal-Mart Stores carrying the day on price and...

She added: "As the pricing disparity between Target, Kohl’s and Penney’s has narrowed, Target has become a little bit less clearly positioned in the mind of consumers."

Wal-Mart has also packed more fashion into its apparel assortment to accompany its low-cost punch. In addition to the firm’s efforts to bring the successful British-born George label to the U.S., the discounter will roll out the new Levi Strauss & Co.’s Signature line of jeans in about 3,000 Wal-Mart stores in time for back-to-school.

The firm’s apparel offering is big business.

Sales of Cherokee-branded apparel in Target stores, for the nine months ended Nov. 2, rose 7.7 percent to $1.4 billion, from $1.3 billion a year earlier.

At the end of its first contract year on January 31, 2002, Target sold $811 million worth of Mossimo goods, according to the licensor. For the nine months ended Sept. 30, sales were up about 11 percent. Assuming that rate continued, despite the disappointing holiday season, Target would rake in around $900 million in sales of the Mossimo brand in the current fiscal year.

Estimates put Target’s overall apparel sales in 2001 around $8.85 billion, second only to Wal-Mart’s $14.96 billion.

A common criticism is that many of Target’s designer names lack the megawatt star power necessary to resonate with customers.

Retail Forward vice president Sandra Skrovan noted that, to some extent, the positioning of the firm’s designer offerings is confusing to shoppers. "There are a lot of names that they’ve been introducing into their stores without, it seems, the big marketing ‘umph’ behind them."

Still, Target is more Target than Mossimo. Instead of focusing just on brands, the firm employs a two-tiered branding approach with the store and designers, said Skrovan. "Consumers don’t shop Target for the brands. They shop Target for the Target brand, basically. If they go to Target, they’re going to probably find something that’s within their price range and a value and quality balance that they’re looking for."

It’s a formula Skrovan, along with others, lauded as successful. "Target can basically coexist with Wal-Mart in the marketplace," she noted.
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