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Target seeks to reclaim cheap chic image

Annie Baxter Aug 18, 2015
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The retailer Target reports earnings Wednesday. The company has had a series of management changes, as it struggles to correct missteps that include a botched expansion into Canada, a data breach that temporarily turned customers away, and a less-than-stellar push into grocery, a low-margin business.   

“Going into food is a good strategy because that promotes more frequent visits,” says Antony Karabus, chief executive of HRC Advisory, a retail consulting firm. “But you can’t just be like any other grocery store. It almost seems like they lost their mojo in terms of what made Target special.”

Karabus thinks Target is now getting back on track. It left Canada earlier this year. In grocery, it’s now focusing less on the packaged stuff that is found everywhere and more on fresh foods and organics. 

Piper Jaffray analyst Sean Naughton says Target’s organic selection expanded nearly 50 percent over the past year. “And it’s actually up about 15 percent even over the last six weeks,” he says. 

Naughton says that could boost revenue over time, since customers are willing to pay a premium for organic products.

Paula Rosenblum, managing partner at RSR Research, a retail consultancy, says Target’s also trying to jazz up its apparel. But, she says, it might be hard to return to the chic ‘Tarjzay” image of its past. 

“Back then, H&M and Zara were a footnote in the U.S.,” she says. “Now they’re not a footnote.”

 

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