Wednesday , May 25 2022
For all of the issues that Target has suffered through over the last five years, the company still has a lot of good brand equity. Millions of customers are still loyal and will give Target every opportunity to improve, but it’s up to the company to seize this second chance.

Why Target Took a Dip and How It Can Recover

Why Target Took a Dip and How It Plans to RecoverTarget rose to prominence because of its niche-serving, inexpensive yet high-quality goods for middle-class Americans. However, over the past couple of years, Target’s performance has been underwhelming. Will the company continue to sink, or is a recovery in the near future?

The Why Behind Target’s Slip

Less than two years ago, Target’s stock price was valued at more than $84. At one point in late May 2017, the price bottomed out at just a hair above $54. That’s a drop of more than 35 percent, something unusual and very concerning for a corporation as established as Target. What has been at the heart of Target’s quick devaluation? Here are a few possible culprits:

  • Slipping numbers. Most concerning is the fact that Target’s numbers have been slipping as of late. Foot traffic has been down over the past year, while revenue in the fourth quarter of 2016 slipped by 4.3 percent. Profits fell almost 43 percent to $817 million.
  • Confusing positioning. One of the most shocking developments is Target’s announcement that it will lower prices to compete more directly with rival Walmart and accept lower margins as a result. While that might sound good to some customers, it’s ultimately in conflict with Target’s historical positioning as a relatively upscale retailer. Many are left wondering what Target’s image truly is.
  • Political stances. While nobody wants to touch the sensitive issue, it’s hard to imagine that Target’s very public transgender bathroom policy has done the company any favors. Thousands of customers have been very outspoken about their refusal to shop at the store until a more conservative policy is reinstated.
  • Lack of trust. While we’re now four years past the famed Target data breach of 2013, it’s possible that many customers still have a lack of trust in the retailer after 40 million credit and debit cards were compromised.

It’s all speculation at this point, but Target’s gradual slip over the past couple of years is certainly tied to some, if not all, of those issues. The quicker they’re able to be corrected, the better off the company will be.

Target Aims for Recovery

Thankfully, it doesn’t appear that Target will be down forever. The brand has enough loyal customers and savvy decision-makers that a recovery is pretty much inevitable. The only question is how long will it take – and what will the company decide to do?

  • Return to what worked. The most important thing for Target is to return to the practices that have helped the company thrive over the past decade. For example, brides and grooms have always flocked to the Target Registry because of its convenience and flexible terms. Target would do well to position marketing and branding around strong suits like this.
  • Compete where possible. There’s a difference between watering down your brand image to compete with competitors and doing things that complement your brand image in an effort to take on competitors. Target is reportedly testing next-day delivery in Minnesota, something Amazon does well. It’s a good place to start.
  • Address store issues. According to many experts, the quality of Target’s stores is a big problem in many markets. “These are far too functional, change too infrequently, and offer very little in the way of inspiration,” analyst Neil Saunders says. “Such a position means that Target struggles to pull in customers – something our data shows is getting worse over time, especially among younger millennial consumers.”
  • Improve ecommerce. The bread and butter for Target will always be its brick and mortar stores; however, they can’t deny the importance of ecommerce. The problem is that they have to do more than match Amazon. In order to stand out, they have to do something that makes customers likely to go to versus COO John Mulligan believes the key is to make it “experiential.”

For all of the issues that Target has suffered through over the last five years, the company still has a lot of good brand equity. Millions of customers are still loyal and will give Target every opportunity to improve, but it’s up to the company to seize this second chance.

Experts Confident Target Will Rebound

If you talk to those within the Target corporation, they’re obviously talking about how optimistic they are about the future. What else would you expect company officials to say? But what are the expectations outside company walls?

The good news is that optimism abounds in the marketplace, too. When you consider all that has gone wrong for Target – and the fact that those mistakes are already priced into the stock – it’s challenging to imagine a scenario where the company’s value could go any direction but up. That’s not to say the recovery will be quick – it’ll most likely be slow and steady – but you can expect it to happen.

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About Jessica McMohen

Jessica is an independent journalist, freelance blogger, and technology junkie with a passion for music, arts, and the outdoors.

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