More on Target Target for Boycott:
I neglected to add the following footnote to the post Target Target for Boycott. The story I posted from Red State commented on Target’s financial decline. I intended to add a footnote that giving you some background information on why Target is in decline drawing on my years of retail experience and my knowledge of the workings of Target. Instead of a footnote, I’ll expand it into a full article about Target’s tone deaf decision to try to mollify the un-mollifiable Left with their new “policy” of allowing anyone into any restroom.
In many respects, Target is a superb retail operation. Target is certainly superior to Walmart operationally if not in number of stores and total sales. Target achieves a disciplined uniformity (in the positive rather than pejorative sense of the term) in their stores that is rare in retail operations. Their entire system of operations is designed to achieve this. It is at once their greatest strength and greatest weakness. More on that weakness below. On the positive side, their stores are immaculately clean especially in contrast to Walmart. Target treats its staff (“Team Members” in Target Talk) far better than Walmart treats its employees.Target has carved a niche for itself by offering high fashion at bargain prices – “cheap chic.” “Tar-zhay”
The quality of the soft goods offered by Target is generally superior to those offered by Walmart. Target manages to do all of this at prices that average 1% lower than Walmart. So much for Walmart’s reputation as being the low price leader in any market.
Corporately and at store level, Target’s ethics are superior to Walmart’s. Walmart, in violation of Federal Trade Commission guidelines, browbeats vendors into giving it free goods and allowances that competitors do not get. The FTC guidelines are that free goods and vendor allowances must be offered on an equal basis to all vendors in a given market. Walmart makes most of its money off the backs of its vendors. That Walmart gets away with this speaks to the corruption both of Walmart and the supposedly watchdog FTC. Target is squeaky clean in this respect. Target’s inventory accounting system is set up so that the company cannot even accept free goods. Vendors can only offer off-invoice allowances to Target. On the other hand, vendors who don’t succumb to Walmart’s demands for free goods will find their merchandise yanked from the shelves, loaded into shopping carts and wheeled out the back door into the weather.
Above, we took a quick look at the positive side of Target. Now we get into the downside of Target. To achieve the store-level discipline and uniformity of execution across the company that Target achieves, virtually all decisions are made at the corporate offices in Minneapolis. At store level, this means that Target really needs little more than robots to execute corporate diktats.
Store stock replenishment is achieved by a very sophisticated system built around scanner data. In other words, the stores do not – and cannot – order merchandise from Target warehouses. Thus a store cannot order extra of an item for a display the store may want to build. Das ist verboten! All displays are dictated by Minneapolis – and the merchandise to build the displays is allocated to the stores from the Target warehouses by corporate.
The automatic replenishment system is designed to replenish the store section by section spread across the week rather than the replenishment being done store-wide on a daily basis. The drawback to this is that, for example, a store in a college town will be wiped out of brooms, dustpans, mops, sheets, pillows and towels when back-t0-school time rolls around and the store has no way to build backroom stock of high-demand items in a situation like this. This often means that sections across the store can have gapping out-of-stocks until the automatic replenishment system rolls around to that part of the store again. You would think that Target would modify the automatic replenishment system to correct this flaw, but in my more than ten years of observing Target, they have not done so. This systemic flaw got Target into serious trouble in their costly aborted foray into Canada.
O, Canada! Beginning in 2013, in rapid order Target opened 133 stores across Canada. One would have thought that the company would have studied the Canadian market better – but they failed to do so and from the very beginning had loud complaints from customers that the product mix was wrong for Canada, that the stores were perpetually out-of-stock on items customers wanted and that Target’s prices were too high.
The price perception issue was caused because a large number of Canadians cross the border into the U.S. to shop (some 10% of the Canadian population regularly shops in the U.S.) and the fact is that prices in Canada are generally a good 25% higher than in the U.S. Canadians complaining about Target pricing were comparing Target’s Canadian pricing to its U.S. pricing. The fact of the matter was that Target’s Canadian prices were highly competitive with Walmart’s Canadian pricing. But perception is everything and from the beginning, Target Canada was saddled with a high price image.
Target’s automated replenishment system failed them badly in Canada. The company’s failure to fix it was a huge factor in Target closing all 133 stores, laying off 17,600 workers and taking a loss of U.S. $5.4 billion.
One of the biggest reasons Target failed in Canada was that Target’s automated replenishment system failed them and the company didn’t fix it. The upshot of Target’s stumble was that Target abruptly shut its new Canadian operations down in 2014 after only 24 months, laying off 17,600 workers and losing U.S. $5.4 Billion in the process.
Target management has become infected with a severe case of arrogance. That arrogance set the stage for their failure in Canada. Arrogance has led Target to stop using (or in many stores remove) the Express checkouts. The company claims that they open another regular checkout when more than three people are in line at any one checkout, but Target insiders tell me that in addition to closing (or removing) the Express lanes, the company has also cut the number of hours allocated to front end operations. Service in the stores has suffered but management refuses to fix this issue.
While Target was failing in Canada, in the U.S.,the company was hit by a massive and costly data breach during the 2013 holiday season. Between the data breach and their failure in Canada, Target’s financials have taken a severe hit.
At the time that Target entered Canada, the CEO was Greg Steinhafel. Under Steinhafel, Target upper management and the Board generally leaned Republican, if not Conservative. Being headquartered in Left-leaning Minnesota, the company took a risk by backing Republican Tom Emmer for Governor against Mark Dayton in 2010. Dayton is a hard core leftist. Ironically, Dayton is from the family that founded Target! Target’s backing of a Republican for Governor caused the lunatic Left to try to shout the company down. This led to a boycott of Target by leftist organizations and groups across the country at that time.
After the Canadian fiasco and the U.S. data breach, Steinhafel “resigned.” He was replaced by Brian Cornell as CEO. Under Cornell, Target’s institutional managerial arrogance has, if anything, stiffened and politically the company has lurched Left. Just as the company failed to read its Canadian customers properly and adjust its operations accordingly there, under Cornell, Target in the U.S. has failed the young families who make up Target’s customer base and the company has succumbed to trying to appease the Left at the expense of its customers. Therein lies the genesis of the company’s decision to allow anyone to go into any restroom in any Target store. This was a decision marked by Target’s fear of the Left engendered by the Left’s reaction to the company’s support of Emmer in 2010. It completely destroys the company’s appeal to the families that form the company’s customer base. Thus we are completely right in politely expressing our displeasure to Target, voting with our feet and finding other stores to shop (hopefully not Walmart) and signing the American Family Association petition against Target. (After Sam Walton’s death, the Walton family and Walmart management have moved Left politically. They even had Hillary Clinton on their board of directors for a time, though this was most certainly strictly a political appointment and it is doubtful that she ever actually did any work as a director. Costco is another company that is good to shun. The two founding families are hard core Leftists. In the 2012 electoral cycle, they hosted two fundraisers for Obama and Costco gave some $2,000,000 to the 2012 efforts to re-elect Obama.)
Is the Target boycott having any sort of effect in such a short period of time? These things are often hard to gauge, but since this boycott began, Target stock has taken a precipitous drop. Last Friday, the shares of Target Corporation Common Stock (TGT) fell 2.52 percent in one day. In addition since 19 April, the day Target announced the new policy, the stock went from a share value of $84.14 to $79.27 per share. That’s a drop of 5.8 percent in 10 days.
The Family Policy institute says they estimate that to be a loss to the company of $2.5 billion dollars.
Contact Target directly: By Message or By Phone: 1-800-440-0680
… And now, in closing: