Target to close 11 stores before year end

Predicting the demise of Sears & Kmart since 2017!
arizonaguy
Store Manager
Store Manager
Posts: 1107
Joined: July 12th, 2013, 6:07 pm
Been thanked: 35 times
Status: Offline

Re: Target to close 11 stores before year end

Post by arizonaguy »

wnetmacman wrote: November 16th, 2017, 9:53 am
Super S wrote: November 16th, 2017, 9:30 am Target had branded filters much later than that. I remember buying them in the early 1990s. They also carried ACDelco and Fram. Target at that time was still more mainstream with their hardlines offerings. These days there are no oil filters and you are lucky if you can find oil.

Target scaled many hardline areas way way back in the mid to late 1990s and this is now a huge weak spot for them.
Target has slowly been scaling automotive back for many years. Auto Centers were open as late as the early 80's, but by the time the stores were redesigned in the mid 80's, the entire department started shrinking. Where Walmart has a huge section with many aisles devoted to automotive, most Target stores have less than one, and no repair/maintenance space. When you consider that your biggest competitor at least has the department in every store, that's a major shortsightedness. One that they cannot get beyond unless they fix it. Even the last Kmart I visited had a full automotive aisle with oil, filters and wipers. Their sporting goods section is okay, but still not up to par with Walmart. (Sam was an avid hunter, and that reflects in Walmart's sporting goods offerings)

In HBA, clothing, and domestics, Target has a good selection. When it comes to DIY and RTA furniture, Target also lacks. It's just not their strong suit, and they either know it but don't acknowledge it, or just don't care to be in that business.

To me, it's a major weakness for them as a company, to fail to fully compete with your closest competition.
Walmart has a better HBA, clothing, and domestics selection. I'd also argue that Walmart has a better Pharmacy all around (I still question why Target outsourced theirs as others have upthread).

I know Walmart had problems a few years ago (with the ill fated Express format and over-expansion) but they seem to have turned the ship around. Their stores look cleaner, better stocked, and better organized than than I can remember. Their website is probably the best of any brick and mortar retailer out there. They seem to have direction and focus.

Target, on the other hand, seems to be throwing darts on a board and hoping a few stick.

A noteworthy article about Walmart's success: https://www.usatoday.com/story/money/20 ... 866096001/
storewanderer
Posts: 14396
Joined: February 23rd, 2009, 3:54 pm
Has thanked: 2 times
Been thanked: 298 times
Contact:
Status: Offline

Re: Target to close 11 stores before year end

Post by storewanderer »

Target is riding on a past image of being "better" than Wal Mart and having success in areas like larger cities in California that have either an anti-Wal Mart sentiment and/or have really bad Wal Marts due to safety issues. Areas where Wal Mart has been able to operate decent stores all along, or clean up some stores that were previously not run so well, they are doing so much better than Target, there is simply no comparison.

I can't imagine how Target even finds its way at this point in markets that have a Fred Meyer or Meijer presence, in addition to the Wal Mart presence.

Target's strategy, however, may not be a bad one. They can continue to open "flexible format" stores in more densely populated areas where Wal Mart either can't or won't go. Most of these will be larger cities. They can probably price them higher too, due to the lack of competition. I believe they can learn to operate this type of format profitably.

I also think Target may have some potential in rural tourist areas, such as ski towns, but given their terrible sporting goods mix, maybe they are the wrong fit for those types of locations that are also popular spots for hikers, etc. during the warmer months.

Outsourcing pharmacy probably wasn't a bad idea because they have so many other areas they need to improve, they may as well let go of something.
pseudo3d
Posts: 3853
Joined: November 12th, 2015, 7:01 pm
Has thanked: 5 times
Been thanked: 77 times
Status: Offline

Re: Target to close 11 stores before year end

Post by pseudo3d »

storewanderer wrote: November 18th, 2017, 5:11 pm Target is riding on a past image of being "better" than Wal Mart and having success in areas like larger cities in California that have either an anti-Wal Mart sentiment and/or have really bad Wal Marts due to safety issues. Areas where Wal Mart has been able to operate decent stores all along, or clean up some stores that were previously not run so well, they are doing so much better than Target, there is simply no comparison.

I can't imagine how Target even finds its way at this point in markets that have a Fred Meyer or Meijer presence, in addition to the Wal Mart presence.

Target's strategy, however, may not be a bad one. They can continue to open "flexible format" stores in more densely populated areas where Wal Mart either can't or won't go. Most of these will be larger cities. They can probably price them higher too, due to the lack of competition. I believe they can learn to operate this type of format profitably.

I also think Target may have some potential in rural tourist areas, such as ski towns, but given their terrible sporting goods mix, maybe they are the wrong fit for those types of locations that are also popular spots for hikers, etc. during the warmer months.

Outsourcing pharmacy probably wasn't a bad idea because they have so many other areas they need to improve, they may as well let go of something.
They could've taken one of their weaker hardline departments and contracted it out to make a boutique-style store-within-a-store, while not mucking up pharmacy, which did have its own ideas (like the ClearRx pill bottles). I'm never going to understand why they did it unless there was a serious financial issue that they didn't want to be made public (conventional retail wisdom holds that the pharmacy is where money is made and usually is only closed or sold from stores as a last-ditch effort to save money.). It hasn't done a lot for stores--the CVS outsourcing has even caused a DECLINE in foot traffic (on the other hand, a well-executed boutique department would've probably driven interest). The only other reason is if they were phasing out pharmacies from new and remodeled stores, which isn't the case either.
architect
Assistant Store Manager
Assistant Store Manager
Posts: 843
Joined: December 8th, 2015, 3:41 pm
Has thanked: 2 times
Been thanked: 7 times
Status: Offline

Re: Target to close 11 stores before year end

Post by architect »

pseudo3d wrote: November 19th, 2017, 9:17 pm
storewanderer wrote: November 18th, 2017, 5:11 pm Target is riding on a past image of being "better" than Wal Mart and having success in areas like larger cities in California that have either an anti-Wal Mart sentiment and/or have really bad Wal Marts due to safety issues. Areas where Wal Mart has been able to operate decent stores all along, or clean up some stores that were previously not run so well, they are doing so much better than Target, there is simply no comparison.

I can't imagine how Target even finds its way at this point in markets that have a Fred Meyer or Meijer presence, in addition to the Wal Mart presence.

Target's strategy, however, may not be a bad one. They can continue to open "flexible format" stores in more densely populated areas where Wal Mart either can't or won't go. Most of these will be larger cities. They can probably price them higher too, due to the lack of competition. I believe they can learn to operate this type of format profitably.

I also think Target may have some potential in rural tourist areas, such as ski towns, but given their terrible sporting goods mix, maybe they are the wrong fit for those types of locations that are also popular spots for hikers, etc. during the warmer months.

Outsourcing pharmacy probably wasn't a bad idea because they have so many other areas they need to improve, they may as well let go of something.
They could've taken one of their weaker hardline departments and contracted it out to make a boutique-style store-within-a-store, while not mucking up pharmacy, which did have its own ideas (like the ClearRx pill bottles). I'm never going to understand why they did it unless there was a serious financial issue that they didn't want to be made public (conventional retail wisdom holds that the pharmacy is where money is made and usually is only closed or sold from stores as a last-ditch effort to save money.). It hasn't done a lot for stores--the CVS outsourcing has even caused a DECLINE in foot traffic (on the other hand, a well-executed boutique department would've probably driven interest). The only other reason is if they were phasing out pharmacies from new and remodeled stores, which isn't the case either.
Due to intense pressure from the health insurance companies, pharmacy reimbursement rates have dropped drastically in the last couple of years. As a result, it has become extremely difficult for small and medium sized operators to make a profit on pharmacy operations. Due to the fact that Target does not have the scale of CVS or Walgreens, it would be difficult for them to be able to continue to compete when negotiating both with the drug manufacturers and the house insurance companies. Essentially, they were being squeezed from all sides, and this isn't even factoring in the current political uncertainty surrounding our healthcare system.
pseudo3d
Posts: 3853
Joined: November 12th, 2015, 7:01 pm
Has thanked: 5 times
Been thanked: 77 times
Status: Offline

Re: Target to close 11 stores before year end

Post by pseudo3d »

architect wrote: November 20th, 2017, 5:33 pm
Due to intense pressure from the health insurance companies, pharmacy reimbursement rates have dropped drastically in the last couple of years. As a result, it has become extremely difficult for small and medium sized operators to make a profit on pharmacy operations. Due to the fact that Target does not have the scale of CVS or Walgreens, it would be difficult for them to be able to continue to compete when negotiating both with the drug manufacturers and the house insurance companies. Essentially, they were being squeezed from all sides, and this isn't even factoring in the current political uncertainty surrounding our healthcare system.
Target had over 1,600 pharmacies, which isn't a small number and more than most supermarkets chains, and anyone knows that pharmacies do bring in customers. Unless CVS offered Target a deal it couldn't refuse, there wasn't a reason to sell the pharmacies.
wnetmacman
Forum Moderator
Forum Moderator
Posts: 994
Joined: January 17th, 2010, 2:36 pm
Has thanked: 2 times
Been thanked: 44 times
Status: Offline

Re: Target to close 11 stores before year end

Post by wnetmacman »

pseudo3d wrote: November 20th, 2017, 6:45 pm Target had over 1,600 pharmacies, which isn't a small number and more than most supermarkets chains, and anyone knows that pharmacies do bring in customers. Unless CVS offered Target a deal it couldn't refuse, there wasn't a reason to sell the pharmacies.
Target had 1672. Here's a comparison:
pharmacies.png
At the time, they were 200 pharmacists short of the number of pharmacies. Also, CVS had 9700, Walgreens 8200, and Walmart 3646. When your main competitor even has 2000 more pharmacies, economics of scale wins every time. A larger chain gets better pricing, no matter how you slice it.
pseudo3d
Posts: 3853
Joined: November 12th, 2015, 7:01 pm
Has thanked: 5 times
Been thanked: 77 times
Status: Offline

Re: Target to close 11 stores before year end

Post by pseudo3d »

wnetmacman wrote: November 20th, 2017, 6:51 pm
pseudo3d wrote: November 20th, 2017, 6:45 pm Target had over 1,600 pharmacies, which isn't a small number and more than most supermarkets chains, and anyone knows that pharmacies do bring in customers. Unless CVS offered Target a deal it couldn't refuse, there wasn't a reason to sell the pharmacies.
Target had 1672. Here's a comparison:
pharmacies.png

At the time, they were 200 pharmacists short of the number of pharmacies. Also, CVS had 9700, Walgreens 8200, and Walmart 3646. When your main competitor even has 2000 more pharmacies, economics of scale wins every time. A larger chain gets better pricing, no matter how you slice it.
Why would Target be so short-staffed? Even (as of that list was made), Kmart staffed its pharmacies correctly as did everyone else (I assume where Dominick's was written, they meant Safeway), though for Kmart the ratio was closer to 1:1 than for its competitors (CVS 2.5:1, Walgreens had 1.2:1, Walmart 1.8:1, Rite Aid 1.2:1, Kroger 1.6:1, Kmart 1.1:1, Safeway 1.2:1). But for Target, it was 0.85:1.

Yeah, their economies of scale don't equal to stand-alone drug stores or Walmart, but they beat out every supermarket chain except Kroger, and yes, their pharmacy operations needed work. They could've closed 200 pharmacies (no doubt in marginal stores) or hired 200 new pharmacists, but nope, they had to outsource the entire division. Good going, really makes me confident in the way you run a company.
Super S
Posts: 2691
Joined: April 1st, 2009, 9:27 pm
Has thanked: 11 times
Been thanked: 61 times
Status: Offline

Re: Target to close 11 stores before year end

Post by Super S »

Stopped at the Kelso Target today. The store seemed to be busy enough. But one thing I noticed were several temporary displays randomly sitting at the end of aisles. One was for makeup, one was for a new Taylor Swift CD, and one was for some kind of chips. In the past Target would not allow such displays because of the "clutter" they create. Makes me wonder if Target has become more lax about this. I also noticed a floor cleaning crew running the cleaning machines in the middle of the day, something Target never allowed to happen during open hours, they always had the cleaning crews come in after hours so customers would not be disturbed. Not sure if most people really care about this stuff when concerned about low prices though.
babs
Assistant Store Manager
Assistant Store Manager
Posts: 762
Joined: December 20th, 2016, 3:08 pm
Has thanked: 19 times
Been thanked: 64 times
Status: Offline

Re: Target to close 11 stores before year end

Post by babs »

storewanderer wrote: November 18th, 2017, 5:11 pm Target is riding on a past image of being "better" than Wal Mart and having success in areas like larger cities in California that have either an anti-Wal Mart sentiment and/or have really bad Wal Marts due to safety issues. Areas where Wal Mart has been able to operate decent stores all along, or clean up some stores that were previously not run so well, they are doing so much better than Target, there is simply no comparison.

I can't imagine how Target even finds its way at this point in markets that have a Fred Meyer or Meijer presence, in addition to the Wal Mart presence.

Target's strategy, however, may not be a bad one. They can continue to open "flexible format" stores in more densely populated areas where Wal Mart either can't or won't go. Most of these will be larger cities. They can probably price them higher too, due to the lack of competition. I believe they can learn to operate this type of format profitably.

I also think Target may have some potential in rural tourist areas, such as ski towns, but given their terrible sporting goods mix, maybe they are the wrong fit for those types of locations that are also popular spots for hikers, etc. during the warmer months.

Outsourcing pharmacy probably wasn't a bad idea because they have so many other areas they need to improve, they may as well let go of something.
Target's target customer is the suburban mom. They walked away from men years ago when they cut down sporting goods, eliminated paint and auto supplies, etc... It was done intentionally because women buy way more stuff than men do. Walmart is still targeting men but Target doesn't. Agree with it or not, that's the key difference.
storewanderer
Posts: 14396
Joined: February 23rd, 2009, 3:54 pm
Has thanked: 2 times
Been thanked: 298 times
Contact:
Status: Offline

Re: Target to close 11 stores before year end

Post by storewanderer »

Also that the margins on those men categories tended to be lower than the margins on the categories Target was heavily selling to women back at that time (clothing, seasonal, home). Target made a profit decision.

However I am not entirely sure Target's current "target customer" is the suburban mom. When I look at the Target Stores in my area which is probably representative of most medium size areas, what I see shopping in them is primarily a younger customer, typically one who lives in an apartment and does not really buy much at once. There are also a few people in the store buying groceries. I don't see many people in the stores with children (a few, but not many; not like Wal Mart which is full of families). I have made similar observations at Target Stores in UT, OR, WA, and AZ.

Target Stores in California, in suburbs of the larger cities, which are generally VERY high volume, yes, they have quite a few customers in there who appear to be the "suburban mom." So maybe it just depends on the market. But in medium markets Target seems to be lost. Wal Mart seems to be packed with customers in medium markets as well as suburbs of larger cities. So does Fred Meyer. So does Meijer. So it seems to me Target is underperforming its competitors in a lot of places.
Post Reply