Time to kill Target?

TargetSome humane farmers carry firearms. When they find an animal in distress and that animal is clearly not going to survive, they put the animal out of its misery, drag its carcass to the side of the road and let the birds take care of the rest.

Wouldn’t it be handy for retailers to learn a lesson and bite the bullet when the time comes? And so it should be with Target. Jason Murphy, a prominent economist, believes that Target is likely to limp along for years. The latest results are not good. Strange how companies report their latest profits even if they are losses, like the $195 million loss just posted by Wesfarmers on behalf of Target.

Guy Russo has been put in charge of Target, alongside his long-held role leading the Kmart DDS chain. He says that if he can clean his model, things will come right for Target. Not exactly fighting words there. It’s tantamount to me saying, ‘If I win the lottery I will shout every reader a holiday to the French Riviera’.

The truth of the matter is that Target has become irrelevant – just as Dick Smith (the company) had become before being sent to the gallows. The foreign entrants are simply doing a better job than Target. These include TopShop, Uniqlo, H&M and others. And why would you put Russo in charge of both Target and Kmart when Kmart has partly been the undoing of Target?

The first clash between the All Blacks and the Wallabies took place on August 15, 1903. Since then, New Zealand has beaten Australia on 108 of the 157 occasions.

On June 1, 1982 NSW played its first State of Origin against Queensland. Since then Queensland has won the series about 60 per cent of the time.

I am not suggesting that we give up as New South Welshmen or Australians on the two sports, but the reality is that a) New Zealand is better than Australia when it comes to Rugby Union and b) Queensland is better than NSW when it comes to rugby league.

That analogy is really quite poor. We play sport for pride and there is not a direct financial loss when we lose. Humankind’s fighting spirit and desire to win impels us to keep trying, forever. But business is different. When you lose, you lose money.

Target must accept that it is losing. Wesfarmers must put it down as quickly and as humanely as possible.

Stuart Bennie is a retail consultant at Impact Retailing www.impactretailing.com.au and can be contacted at stuart@impactretailing.com.au or 0414 631 702.

Comments

8 comments

  1. Avatar

    Dave posted on September 2, 2016

    All depends on one's perception of humane & how much effort one's prepared to put into recovery. reply

  2. Avatar

    Peter posted on September 2, 2016

    Totally agree Jan, I don't shop at either, the quality is trashy and you can get that at a lot of places. reply

  3. Avatar

    Paul Fetterplace posted on September 2, 2016

    Stuart, I think you might be a bit trigger happy with Target. Wesfarmers have a great record of running strong businesses, esp in the retail space. Bunnings has been a winner since concept, Coles is an outstanding recovery story that has harpooned WOW big time and Guy Russo turned Kmart around despite my initial misgivings that a man from McDonalds could master more convential retail. The answer is not to do another Kmart - but perhaps rediscover the Target that was much loved by young mothers and women generally. The offer was exceptional kids wear, underwear that was trusted and homewares people wanted. It takes a good merchandise strategy, good product sourcers/developers and an efficient supply chain with the right marketing chutzpah. Give Guy some more space and expect to be surprised. Big W, on the other hand, is dead in the water and WOW does not have a clue on how to turn it around. Watch this DDS space! reply

  4. Avatar

    Matt posted on September 5, 2016

    Please, take it away. They have got it so, so wrong for so, so long. The offer is tired, the store re-works already look confused and tired. They will become Kmart II for a while now and then hopefully convert appropriate stores to that brand and divest the rest. reply

  5. Avatar

    Helen posted on September 5, 2016

    I agree with Paul Fetterplace and believe that there is room in the market for Target - positioned between DDS and higher end retailers. K-Mart offers a narrow range of entry level well priced basics and if Target returned to it's roots of good quality, reasonably priced kidswear, family underwear, lingerie and sleepwear, fashion basics for men and women and classic homewares, they could recapture the middle ground. They have some great locations and the brand could be revived with the right strategy - will watch with interest. reply

  6. Avatar

    Tony Curl posted on November 2, 2016

    By blurring the lines between the two, the risk is you downplay both brands. reply

  7. Avatar

    Andrew posted on November 2, 2016

    Interesting call given your job. Calling death on a company that employees 10s of thousands and still has billions in revenue. Sure it's not currently making profit, but as a consultant I would have thought you'd have insight to turn it around. But it is easy to sit behind a TV and call out statistics. Harder to get on the field and do something about it. reply

  8. Avatar

    Andrew posted on November 8, 2016

    Maybe Target will need to become the McCafe to K-Mart's McDonalds if both are going to survive. At the moment they are two competitive kids on a see-saw who have both been told they will be rewarded if they win. Neither business has ever, since the merger of Coles and Myer, taken into consideration whether their actions are best for the corporation, only what is best for their brand. Culturally they are worlds apart. reply

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