TARGET STORES, the crown jewel of the Target Corporation, would appear to have everything: zippy ads,
fast-growing sales and exclusive merchandise that people rave about. But inside the headquarters tower
here, where Target's decisions are made, no one is about to relax.
With Kmart hobbled by bankruptcy, it is Target that now gets the attention of Wal-Mart Stores, the biggest
retailer in the land and the biggest company, too. Every successful step that Target takes -- signing
designers to make baby bottles and little black dresses, moving deeper into the grocery business,
persuading more and more upper-middle-class shoppers to become upper-middle-class bargain hunters --
brings it into closer confrontation with the $218 billion behemoth that is Wal-Mart.
At stake are the wallets of the growing number of consumers who shop discount stores by choice.
Shoppers go to Target for a selection that includes detergent and batteries, in the tradition of all discount
stores, but also for designs from Philippe Starck, Stephen Sprouse, Sonia Kashuk and Todd Oldham that
can be found only at Target. (Executives say good design should be democratized.) ''I like the idea of having
good design at affordable prices,'' said Sarah Ettenberg, a decorative-arts expert in Manhattan who shops
for Michael Graves and Philippe Starck housewares but also pairs Target blouses with more expensive
slacks she buys elsewhere.
customers who live paycheck to paycheck ''will always be important to us, but we've realized the shifts that
have gone on in retailing, particularly this year. Customers at all income levels are interested in value.''
Target executives like to point out that the chain promotes contemporary fashion while it keeps prices low,
while Wal-Mart is known for low prices, and low prices only. But the two chains have much in common. Both
are building grocery stores by the dozen -- Wal-Mart calls them SuperCenters and Target calls them
SuperTargets -- to attract new customers. That means they will be competing more intensely in a category in
which margins are already razor-thin.
By expanding into the grocery business, Wal-Mart wants to increase the volume of shoppers coming into its
stores. But it also wants to increase the average purchase made by those shoppers, which also means
adding higher-ticket products to the mix of general merchandise.
Target says its strategy is to have its existing customers buy groceries, swelling their purchases and
bringing them into the stores more often. The company says it is not counting on luring customers from other
supermarkets. It also assumes that former Kmart customers will wind up at Wal-Mart rather than Target.
''You can't have Michael Graves oranges,'' he said, referring to the designer who has helped Target give its
housewares a distinctive style.
There is, however, a Fuji apple at SuperTarget that has been screened for sweetness, using infrared