Wednesday, January 06, 2010

Target's Great Save Event

According to this article by Sarah Gilbert, Target will be launching a "Great Save Event" in its stores from now through February 21st. In this event, Target will sell large bulk items, such as large packages of paper towels, in its seasonal aisles. In a sense, Target will create a Costco-type section within its stores for a seven week period. They hope people will seek out the treasure hunt experience in this special section, and perhaps visit the store a bit more often than usual in this post-holiday time period.

Does this make sense? I think it does. The seasonal aisles are probably not very productive in terms of sales per square foot in the period immediately after Christmas. Why not use that square footage to do something exciting and innovative? Moreover, consider the typical Costco customer. You might think that lower income folks who are eager to save tend to be the ones shopping warehouse clubs. That is NOT the case! In fact, the typical warehouse club customer tends to have a bit higher income. Why? Well, you may save on a per unit basis at a wholesale club, but the total cash outlay when buying items in bulk is quite high. Plus, you must pay an annual fee. Moreover, you need a decent-sized vehicle to carry these items home, as well as a good-sized house to store these items. Small business owners also tend to shop warehouse clubs quite often. All that adds up to a customer demographic that is more affluent than you might think at first. Just take a look at the brands of vehicles in a typical Costco parking lot!

Why is this information about the demographics important? Well, Target aims to serve customers who are a bit wealthier than the typical Wal-Mart customer. They have a differentiated strategy, which includes selling some designer-type items at a premium price. Thus, their target demographic fits nicely with the typical warehouse club customer demographic. Target's customers should be attracted to this Great Save Event.

1 comment:

Amrita said...

another point to be noted: wholesale retailers like Costco and Sam's club require a membership. The convenience of not needing a membership is sure to attract more customers to Target.