How Target made customer experience the cornerstone of its brand

After Target released another quarter of impressive earnings last month, Neil Saunders, a retail analyst with GlobalData Retail, wrote, “Target has managed to pull another rabbit out of the hat.” See all of Ad Age's 2021 Marketers of the Year here. While the Minneapolis-based retailer’s growth certainly seems like a magic trick, Target’s success can actually be traced back to a series of strategic marketing and operational moves that have buoyed the brand with consumers. Recent partnerships for shop-in-shops with Disney and Ulta Beauty, as well as a new collaboration with Lego ahead of the holiday season, have helped Target attract new customers and increase brand love among current loyalists. At the same time, new innovations around how consumers shop—through same-day delivery, curbside pickup and in-store improvements—have engendered trust with customers eager for consistency from their retailers. Target is also growing through its retail media network, Roundel, which was an early adopter of the now established strategy of offering targeted marketing for advertisers. “The last 18 months have required us to build new muscles in how to stay nimble and agile, and meet guests where they’re at with needs and expectations,” said Cara Sylvester, a Target veteran who was promoted to executive VP and chief marketing and digital officer early this year. “We are going to continue to iterate. It’s not just one marketing moment, or one brand campaign or message—it’s about the connected experience across every touchpoint where our guest is going to interact with Target.” For its third quarter, which ended Oct. 30, Target posted revenue growth of 13% to $25.3 billion and comparable sales rose 13%, following a 21% increase in the year-earlier period. Target said its same-day services, including drive-up pickup, in-store pickup and Shipt delivery, grew 60%. “Improvements in stores, to online services, and to products have all allowed it to take advantage of prevailing conditions to a greater extent than many other retailers,” wrote Saunders. “Essentially, Target has put itself in a favorable position that means it is more insulated, although not immune, from inflation in costs and overheads.” However, the degree of insulation could change as consumers become more price-conscious amid an uptick in the cost of everyday essentials. A recent report comparing prices over a three-month period ending Oct. 3 from e-commerce analytics firm Profitero found that Target’s prices were 15% higher than competitor Amazon, an increase of 2 percentage points over last year. “Price sensitivity is starting to become more in the line of sight of shoppers,” said Sarah Hofstetter, president of Profitero. “As we come into the holiday season and consumers spend more during Q4 than they did the rest of year, the bills for your typical staples are going to become more scrutinized because you’re going to be leaving the store wondering how that got so expensive.” To that end, Target is already focusing on making its store experience worth any extra cost. Over the summer, the chain rolled out Ulta shops within 100 Target stores and on its e-commerce site with the goal to eventually reach 800 store sites. A similar initiative with Disney has helped to boost Target as a toy destination for families with young children. The new Lego collaboration goes beyond bricks to include home and apparel items designed specifically by both brands for an exclusive offering. A series of products “designed to be playful, spark creativity and fill your holiday season with joy,” according to Target’s site, include a Lego stripe cardigan, color-blocked dog collar and decorative Lego brick-style storage box with handle. Each collaboration gets its own marketing push—the new Lego partnership, for example, is connected to Target’s broader holiday campaign and has been running across digital, influencer channels, along with spaces like YouTube where Lego lovers typically gather. In addition, Target hosted an interactive outdoor event for families in November to spread the Lego word. “It’s about having the right portfolio and mix of brands that our guests love,” said Sylvester. “We’re giving them fewer reasons to shop anywhere else.” She and her team of 2,000 marketing and digital employees have also focused on building loyalty, offering periodic promotions designed to help more cost-conscious consumers while also building brand enthusiasm. Target’s loyalty program, Target Circle, now boasts 100 million members. “Improvements in stores, to online services, and to products have all allowed it to take advantage of prevailing conditions to a greater extent than many other retailers,” wrote Saunders. At a time when many brands are paying more attention to diversity initiatives, Target has been vocal about its commitments to equality and specifically the Black community, where the marketer plans to spend more than $2 billion by the end of 2025. Target increased its investment in Black-owned and Latin-owned media for its holiday ad campaign by a double-digit percentage; the advertising showcases Black-owned brands including Scotch & Porter and Black Cards Revoked. In the retailer’s holiday spot this year, families are shown celebrating a diverse number of holidays, including Christmas, Hanukkah, Diwali and the Lunar New Year. “It’s making sure in our holiday campaign that we are truly trying to represent our guests in all the ways our guests may feel that holiday season,” said Sylvester. She added that Target is “moving from an episodic touchpoint to always-on.” Previously, the chain would have had a big push around Black History Month but now makes such marketing investments year-round. Along with fostering connections with its customers, Target is also building its reputation with brands. The retailer rebranded its media business as Roundel two years ago, long before most competitors recognized the valuable customer data retailers have access to. Since then, chains including Lowe’s, Albertsons and Dollar Tree have all started their own media networks for advertisers. “This isn’t new for us,” said Sylvester. “We saw the rich opportunity to say we want to make sure we’re providing our guests and our partners with the most value.” See all of Ad Age's 2021 Marketers of the Year here.

How Target made customer experience the cornerstone of its brand

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