Target Business Model: A Comprehensive Review

In today’s competitive business landscape, understanding the intricacies of successful business models is crucial. One such model that has garnered attention is the Target business model. By leveraging innovative strategies and a customer-centric approach, Target has established itself as a prominent player in the retail industry.

Target’s business model is built on a foundation of key elements, including a well-defined value proposition, diverse revenue streams, and a deep understanding of customer segments. These components, along with a keen focus on continuous improvement and business development, have contributed to Target’s sustained growth and competitive advantage.

The Target business model is rooted in the principles of the Lean Startup methodology, which emphasizes rapid experimentation and iterative development. By utilizing tools such as the Business Model Canvas and conducting thorough SWOT analysis, Target ensures that every aspect of its business aligns with its overarching objectives.

Key Takeaways:

  • The Target business model is based on a multilateral sales system, including retail, online, and leasing sales, as well as credit card fees.
  • Target’s comprehensive understanding of customer segments allows them to provide a wide range of products and a satisfactory customer experience.
  • Target Corporation has a strong competitive advantage through differentiation, offering higher-quality products at affordable prices.
  • Continuous business development and investment in enhancing the shopping experience help Target stay ahead of competitors.
  • Target’s innovative approach to its business model ensures a solid foundation for future growth and success.

History and Expansion of Target Corporation

Target Corporation, originally established in 1962 as a division of Dayton’s department store, has a rich history in the retail industry. Starting with store formats under the Target brand in the 1990s, the company has experienced significant expansion and growth, establishing itself as a major player in the retail landscape.



Target Corporation, headquartered in Minneapolis, Minnesota, has expanded its presence beyond its initial department store roots. The company now operates over 1,900 store locations across all 50 states, with a workforce of over 350,000 employees both in the United States and abroad.

Target is widely recognized for its fully enclosed shopping malls, which provide a unique and convenient shopping experience for customers. With its focus on customer satisfaction and a diverse range of products, Target has successfully expanded to become one of the top retailers in the United States.

Stay tuned for the next section, where we will explore Target’s various retail formats and their significance in the industry.

Target Retail Formats

Target offers a diverse range of retail formats to cater to different customer needs and preferences. These formats include:

  1. Target (Discount Store): Target’s flagship retail format offers a wide variety of products at affordable prices. With over 1,900 store locations across the United States, Target stores provide a one-stop shopping experience for customers seeking everything from household essentials to clothing, electronics, and more.
  2. SuperTarget (Hypermarket): SuperTarget takes the traditional Target store experience to the next level by combining general merchandise with a full-service grocery store. Customers can find everything they need under one roof, from fresh produce and groceries to household items and electronics. SuperTarget stores are larger in size and offer an extensive selection of products to meet the diverse needs of shoppers.
  3. Small-format stores (previously known as CityTarget and TargetExpress): Target’s small-format stores are designed for urban areas and provide a convenient shopping experience for customers in densely populated locations. These smaller stores offer a curated selection of products tailored to the specific needs of urban shoppers, including groceries, beauty products, apparel, and household essentials.

Target’s retail formats ensure that customers have access to a wide range of products, spanning various categories such as beauty, health, clothing, electronics, and more. By offering these different formats, Target aims to provide convenience and cater to the diverse preferences of its customer base.

Retail Format Features Product Range
Target (Discount Store) Affordable prices, wide product selection Household essentials, clothing, electronics, and more
SuperTarget (Hypermarket) General merchandise and full-service grocery store Fresh produce, groceries, household items, electronics, and more
Small-format stores Convenient shopping experience in urban areas Groceries, beauty products, apparel, household essentials, and more

The Founding and Evolution of Target Corporation

Target Corporation, one of the largest retailers in the United States, traces its roots back to its founder, George Dayton. In 1902, George Dayton established Dayton Dry Goods, laying the foundation for the future retail giant. Over the years, the company has undergone significant changes, evolving into what we know today as Target Corporation.

As the company grew and expanded, it embarked on a series of strategic moves and mergers. In 1969, Dayton Corporation, the parent company of Target, merged with J.L. Hudson Company, a leading department store of the time, to form Dayton-Hudson Corporation.

Under the new entity, the company continued to adapt and transform, making key leadership changes and rebranding efforts. In 2000, Dayton-Hudson Corporation officially changed its name to Target Corporation, reflecting its focus on the Target brand.

Throughout its history, Target Corporation has also diversified its business interests through the creation of subsidiary companies. With over 30 subsidiaries, Target Corporation has expanded its presence and offerings in various sectors, including real estate, financial services, and distribution.

  • Subsidiary 1
  • Subsidiary 2
  • Subsidiary 3

Target Corporation’s evolution has also been marked by changes in store names and logo designs. The company has consistently repositioned itself to stay relevant in the ever-changing retail landscape.

Now, let’s take a closer look at Target’s mission statement and brand promise in the next section.

Target’s Mission Statement and Brand Promise

Target, as a leading retailer, has a clear mission statement and brand promise that drives its business operations. The company aims to provide tremendous value, drive innovation, and deliver the best shopping experience for its customers.

Target’s mission statement encompasses its commitment to offering exceptional value to customers. By consistently providing high-quality products at affordable prices, Target ensures that customers can find what they need without breaking the bank.

The brand promise, “Expect more, pay less,” is a testament to Target’s dedication to delivering value to its customers. It emphasizes Target’s intention to go above and beyond customers’ expectations by offering a wide range of quality products and superior customer service while maintaining competitive pricing.

Target’s brand promise is reinforced through its innovative approach to retail. The company continually seeks new ways to improve the shopping experience, leveraging technology and data-driven insights to enhance convenience and personalization for its customers.

As part of its commitment to innovation, Target invests in the development of new products, services, and technologies to stay ahead in the retail industry. By embracing innovation, Target aims to provide customers with a seamless shopping experience both online and in-store.

Through its mission statement and brand promise, Target strives to create value for its customers, promote innovation, and maintain its position as a leader in the retail industry.

Target’s Mission Statement and Brand Promise

Mission Statement To provide tremendous value, innovation, and the best shopping experience for its customers
Brand Promise “Expect more, pay less”

Revenue Generation and Merchandise Sales

Target Corporation generates a significant portion of its revenue through merchandise sales, which make up 98.7% of its total revenue. The company offers a diverse range of product categories to cater to the needs and preferences of its customers. These product categories include:

  • Apparel and Accessories
  • Food and Beverages
  • Home Furnishings
  • Electronics
  • Beauty and Personal Care
  • Toys and Games
  • Health and Wellness
  • Pets
  • And more

Target’s merchandise sales contribute to the majority of its revenue streams, reflecting the company’s commitment to providing a wide variety of high-quality products to its customers.

In addition to merchandise sales, Target also engages in online sales. While online sales contribute to a smaller percentage of merchandise sales, the company recognizes the importance of e-commerce in the modern retail landscape. Target’s online platform allows customers to conveniently shop for products from various product categories and have them delivered directly to their doorstep.

Overall, Target’s revenue generation primarily relies on its robust merchandise sales, with online sales serving as an additional revenue stream.

Product Categories Percentage of Merchandise Sales
Apparel and Accessories 27.4%
Food and Beverages 18.6%
Home Furnishings 14.2%
Electronics 12.8%
Beauty and Personal Care 9.7%
Toys and Games 8.5%
Health and Wellness 5.3%
Pets 3.5%
Other 0.8%

Credit Card Profit Sharing and Other Revenues

Target Corporation has implemented various strategies to diversify its revenue streams and maximize profitability. In addition to merchandise sales, the company leverages credit card profit sharing and strategic partnerships to generate additional income.

Credit Card Profit Sharing

Target has a credit card program agreement with TD Bank, wherein it receives a percentage of profits from credit card transactions. This agreement allows Target to benefit from the revenue generated by its customers’ credit card usage. By partnering with TD Bank, Target capitalizes on the popularity of credit cards and boosts its overall profitability.

Other Revenues and Partnerships

In addition to credit card profit sharing, Target generates revenue from various sources. These include advertising, rental income from tenants within its retail spaces, and service revenues. By exploring alternative income streams, Target ensures a diverse revenue base and reduces its dependence on merchandise sales alone.

Target also forms strategic partnerships with other companies to collaborate on branding and marketing projects. Through these partnerships, Target can tap into new customer segments and benefit from the expertise and resources of its partners. Such collaborations enable Target to achieve mutual brand exposure and generate additional revenues.

With its comprehensive approach to revenue generation, Target remains resilient amidst evolving market dynamics and intensifying competition.

Source of Revenue Percentage Contribution
Merchandise Sales 98.7%
Credit Card Profit Sharing Varies based on credit card usage
Advertising
Rental Income
Service Revenues

Note: The percentage contributions for advertising, rental income, and service revenues have not been disclosed.

Credit Card Profit Sharing

Target’s Competitive Position in the Retail Industry

Target faces formidable competition in the retail industry, with one of its main rivals being Walmart. While both Target and Walmart are major retail giants, Target sets itself apart through its emphasis on offering higher-quality products at affordable prices, coupled with a commitment to delivering an exceptional in-store experience.

One significant aspect that distinguishes Target from Walmart is its customer demographics. Target has strategically targeted millennials, young families, and urban dwellers who prioritize style, design, and a curated shopping experience. This focus on specific customer segments allows Target to tailor its merchandise offerings and store layouts to cater to the preferences and needs of its target audience.

In contrast, Walmart has historically catered to a broader demographic, with a primary focus on cost-conscious customers seeking low prices for everyday essentials. Walmart’s extensive store footprint spans across rural, suburban, and urban areas, allowing the company to capture a wider market reach.

These distinct strategies enable both companies to excel in their respective markets. Target’s focus on customer experience, product curation, and stylish offerings positions it as an attractive destination for individuals seeking a more elevated shopping experience. On the other hand, Walmart’s vast network of stores and emphasis on everyday low prices appeals to customers prioritizing accessibility and affordability.

By leveraging their competitive advantages and understanding the nuances of their customer demographics, both Target and Walmart are able to thrive within the retail industry, each with its unique value proposition and market positioning.

Target Walmart
Competitive Advantage Focuses on higher-quality products at affordable prices Prioritizes everyday low prices
Customer Demographics Millennials, young families, and urban dwellers Cost-conscious customers
Market Reach Nationwide presence with tailored store formats Wide network covering rural, suburban, and urban areas
Key Focus Customer experience, product curation, and style Accessibility and affordability

Target’s Growth Strategies and Future Plans

In order to maintain its competitive edge and drive further success, Target has implemented a series of growth strategies and has ambitious plans for the future. By focusing on key areas such as investment, enhanced shopping experience, and product expansion, Target aims to continue its growth trajectory and meet the evolving expectations of its customers.

Differentiation through Owned and Curated Brands

One of Target’s key growth strategies is to differentiate itself through a robust portfolio of unique owned brands and curated national brands. By offering exclusive products that cannot be found elsewhere, Target attracts customers looking for a distinct shopping experience. This approach allows the company to cater to diverse customer preferences and stay ahead of competition.

Creating an Engaging and Convenient Shopping Experience

Enhancing the shopping experience is a top priority for Target. The company continually invests in creating an environment that is not only visually appealing but also seamless and convenient for customers. From optimizing store layouts to implementing innovative technologies, Target aims to provide an enjoyable and hassle-free shopping experience across all channels.

Leveraging Stores as Fulfillment Hubs

Recognizing the growing importance of omnichannel retail, Target leverages its network of physical stores as fulfillment hubs. This strategy enables the company to offer various delivery options, including in-store pickup and same-day delivery, enhancing convenience for customers. By seamlessly integrating its online and offline channels, Target aims to provide a flexible and efficient shopping experience.

Engagement through Loyalty Programs

Target understands the significance of customer loyalty and the value it brings to the business. To foster strong and lasting relationships with its customers, Target has established a robust loyalty program. Through personalized offers, exclusive discounts, and tailored recommendations, the program enables Target to engage with customers on a deeper level, driving repeat purchases and brand loyalty.

Expansion and Store Updates

As part of its growth strategy, Target plans to open new stores in strategic locations to expand its footprint and reach a wider customer base. Furthermore, the company aims to update existing stores to ensure they align with the evolving needs and preferences of customers. By continuously refreshing its store environment, Target remains relevant and appealing to its target demographic.

Expansion of Sortation Centers

To support its growing e-commerce operations, Target plans to expand its sortation centers. These centers play a crucial role in streamlining the fulfillment process and enabling faster and more efficient delivery. By investing in these facilities, Target aims to improve the speed and accuracy of order fulfillment, further enhancing the online shopping experience for its customers.

With these growth strategies and future plans, Target solidifies its position as a leading retailer committed to providing exceptional value and an enhanced shopping experience. By investing in innovation, expanding its product offerings, and continuously improving its operations, Target is well-positioned for continued success in the dynamic retail industry.

Conclusion

Target Corporation, with its solid business model and diverse product assortment, has firmly established itself in the retail industry. By strategically positioning itself and focusing on growth and innovation, the company continues to meet the ever-changing needs of its customers, ensuring it maintains a competitive advantage. Target’s mission statement and brand promise further emphasize its commitment to providing exceptional value and the best shopping experience for its loyal customers.

With a multilateral sales system that includes in-store, online, and leasing sales, Target offers convenience and accessibility to shoppers across the United States. The company’s extensive network of over 1,900 store locations ensures that customers can easily find and purchase the products they need.

Target’s dedication to continuous improvement and customer satisfaction is evident in its strategic partnerships, investment in enhanced shopping experiences, and expansion plans. By leveraging its strong brand presence, Target aims to deliver innovative solutions and a seamless shopping journey for its customers, while also exploring new market opportunities and expanding its product offerings.

FAQ

What is the target business model?

The target business model relies on a multilateral sales system, including retail, online, and leasing sales, as well as credit card fees. Target generates revenue primarily through merchandise sales.

How many store locations does Target have?

Target has over 1,900 store locations across all 50 states in the United States.

What products does Target offer?

Target offers a wide range of products, including beauty, health, clothing, electronics, and more.

When and how was Target Corporation established?

Target Corporation was established in 1962 as a division of Dayton’s department store. It started with store formats under the Target brand in the 1990s and expanded to other parts of the nation.

What is Target’s mission statement and brand promise?

Target’s mission statement is to provide tremendous value, innovation, and the best shopping experience for its customers. The brand promise is to “Expect more, pay less.”

How does Target generate revenue?

Target generates revenue primarily through merchandise sales, which account for 98.7% of its total revenue. The company also receives a percentage of profits from credit card transactions and generates revenue from other sources, such as advertising, rental income, and service revenues.

Who are Target’s main competitors?

Target competes with retail giants like Walmart. It differentiates itself by offering higher-quality products at affordable prices and aims to provide a better in-store experience.

What are Target’s growth strategies and future plans?

Target plans to open new stores, update existing ones, and expand its sortation centers. The company also focuses on investing in creating an engaging and convenient shopping experience, leveraging its stores as fulfillment hubs, and expanding its product assortment.

What is Target’s competitive advantage?

Target differentiates itself from competitors by offering higher-quality products at affordable prices and focusing on providing a better in-store experience. It also caters to a different customer demographic compared to Walmart.

How has Target evolved over the years?

Target Corporation was founded in 1902 by George Dayton. It started as Dayton Dry Goods and later merged with J.L. Hudson Company to become Dayton-Hudson Corporation. The company has evolved with changes in leadership, store names, and logo designs.