Looks Who’s Stalking Wal-Mart

Emphasizing value has become the focus of many services during the economic downturn, but how does a company do this without “cheapening” its brand image? Big box retailers like Wal-Mart are behemoths selling goods ranging from groceries to hunting supplies. While it is convenient to buy apples and guns in one place, there is a stigma attached to shopping at these discount department stores. Target, while having similar price points as its competitors, has branded itself as the chic alternative, even gaining the nickname “Tarzhay,” which indicates its appeal to fashionistas. Compared to Wal-Mart stores, Targets are generally brighter, cleaner, and hipper in aesthetics, which the company believes adds to the shopping experience. But with the coming holiday season where consumers are still frugal, they’ve found a need to emphasize value.

When the economy collapsed, consumers wanted bargain, which was Wal-Mart’s expertise. At the same time, Target was still rolling out new stores carrying new products from couture designers (e.g. Anna Sui, Alexander McQueen). Despite also being a center for big bargains (their slogan is “Expect More, Pay Less”), their hip image did not resonate with shoppers as a place to find value. Target found they had to remind shoppers that they’re also a bargain-based store without sacrificing its image, without looking like Wal-Mart. Target’s main shopper is a working mother in her 40s. In their campaigns, they made this mother a hero, someone whose children think is cool. But as the economy slumped, mothers no longer related to the ads, so Target had to focus on low prices “without making Target’s customer feel cheap.” Target has found success in their lines of affordable designer brands, highlighting that “good value can be chic.” With the coming holiday season, Target will devote 75% of its advertizing to emphasizing price. Additionally, Citigroup analyst Deborah Weinswig says Wal-Mart and Target are at price-parity, but Target does with better customer service.

Operators in the hospitality industry may have found their brand affected by the economic slowdown. The image and brand one company may have worked so hard to create now finds its drawback, especially in the coming holiday season where people are not the spendthrifts they once were. The tricky part is guests still don’t want to fee cheapened; guests at a nice Italian restaurant will want a good value without feeling like they’re eating at Pizza Hut. This is the tough part, but one that operators must use some ingenuity to overcome.  After all, Target is showing it can be done.

For more specifics on Target’s success with the cheap-chic appeal, and its desire to maintain its brand image, this BusinessWeek article by Michelle Conlin is worth a read.

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