grocery stores, including fresh produce. One shopper’s reaction was just what Target was hoping for. A Wisconsin housewife and mother of two stopped by her local Target to buy deodorant and laundry detergent before heading to the local grocery store. But as she worked her way through the fresh-food aisles, she found everything on her list. “I’m done,” she said, as she grabbed a 99-cent green pepper. “I just saved myself a trip.” While the mini-grocery test stores showed promising results, groceries also represented a low-margin expansion. Walmart was seeing most of its gains in higher margin discretionary goods like bedding, traditionally Target’s stronghold. But in a second operational change, Target surprised many analysts by unveiling a new package for its main store brand . . . one without the familiar Target bull’s eye! That is, the packages discard the bull’s eye, replacing it with big, colourful, upward-pointing arrows on a white background, with the new brand name, “up & up.”
Continuing to address the trend of higher store brand sales, Tesija stated, “We believe that it will stand out on the shelf, and it is so distinctive that we’ll get new guests that will want to try it that maybe didn’t even notice the Target brand before.” Up & up products are priced about 30 percent lower than comparable name brand products. Target began promoting the store brand in its circulars and planned to expand the total number of products under the label from 730 to 800. While initial results showed an increase in store brand sales for products with the new design, it is unclear just how many of those sales came at the expense of name brand products. Signs of Life Target’s journey over the past few years demonstrates that changing the direction of a large corporation is like trying to reverse a moving freight train. Things have to slow down before they can go the other way. But after 18 months of aggressive change, it appears that consumers may have finally received the message. During the first half of 2010, sales rose by as much as 5 percent with profits up a whopping 54 percent. Both spending per visit and the number of store visits increased. All of this could be attributed to the fact that the effects of the recession were starting to loosen up and consumer confidence was stabilizing. But in a sign that Target’s efforts were truly paying off, Walmart’s sales growth was slowing during this same period and even showing signs of decline. Customer perceptions of Target’s value were indeed on the rise. Steinhafel made it very clear that the new signs of life at Target were being met with cautious optimism. “Clearly the economy and consumer sentiment have improved since their weakest point in 2009,” said the Target CEO. “But we believe that both are still somewhat unstable and fragile and will likely continue to experience occasional setbacks as the year progresses.” Steinhafel’s comments reflected an understanding that even as the economy showed signs of recovery, research indicated that consumers everywhere were adopting a new-found sense of frugality and monetary responsibility.