Target SWOT Analysis 2021

Target SWOT Analysis 2021

Target is a popular supermarket retailer. It is known for its iconic logo and trendy product lines. This makes Target appealing to price-conscious customers while still offering premium products than other retailers. 

Although Target seems to have no negatives, there are still potential problems that could affect the company.

Let’s take a look at Target’s strengths, weaknesses, and opportunities.

Target SWOT Analysis

Background of Target

Company’s Name Target Corporation
Company’s Former Names Goodfellow Dry Goods, Dayton’s Dry Goods Company, Dayton Company, Dayton Corporation, Dayton-Hudson Corporation
CEO Brian C. Cornell
Company Type Public
Year Founded 1902
Number of Employees 360,000 (2019) (approximately)
Annual Revenue US$ 78.112 billion
Founder George Dayton, John Geisse
Area Served Worldwide (excluding North Korea, Mainland China, Syria, Crimea)
Headquarters Target Plaza, 1000 Nicollet Mall, Minneapolis, Minnesota
Operating Income US$ 4.11 billion (2019)

Introduction to Target

It is crucial to know the details of the company in order to perform the Target SWOT analysis. It is based in Minnesota, USA, and is one of America’s largest retail brands. 

They are known for offering a wide range of products at an affordable price. According to the 2019 data, there are more than 1844 locations across the United States.

Strengths In The SWOT Analysis Of Target

Target SWOT Analysis

  • Strong Presence in America: Target is one of the most prominent retailers in the USA with large-scale operations. Target’s large scale allows it economies-of-scale, which gives it huge buying power and can enforce low prices.
  • Differentiation Through merchandise: Target has positioned itself to differentiate itself from Walmart by the merchandise it sells. Target offers products that are stylish and affordable. Target has partnered with dealers and various designers to offer a variety of merchandise at low prices, which will give it a competitive edge. Target’s pricing strategy has been adjusted to reflect consumer behavior: Target has updated its price positioning in line with market trends and introduced schemes like “Low Price Promise” and “Expect More.” To provide value to customers at low prices, Target has introduced “Pay Less” to help them. This increases the customer base and gives you a competitive advantage.
  • Loyalty program: Target launched the REDcard Rewards loyalty program in 2010. This program allows customers to receive discounts on their purchases at Target’s store and target.com. The penetration of REDcard grew to over 21 percent within five years. These initiatives are a great way to build customer loyalty and offer business security.

Weaknesses In The SWOT Analysis Of Target

Target SWOT Analysis

  • Expensive According to a study by a business insider Target charges around 15% higher for groceries than Walmart, their largest competitor.

  • Customer Data Security Target was the victim of one of the most severe data breaches in 2014. Nearly 70,000,000 customers’ debit/ credit card information was stolen. Target suffered a negative reputation as a result and was subject to many class-action lawsuits.
  • Target has a very small presence in the International Market. Target has not been able to expand internationally. Target opened 133 stores in Canada between 2011 and 2015. Target’s expansion into the international market proved to be a huge failure and they had to close all their stores in Canada.
  • Store-Centric Approach In order to survive in the digital age, retailers must adopt an eCommerce-first strategy. Target is one of the few retailers that have benefited from online shopping. However, brick-and-mortar sales are declining which is affecting online sales. Target’s sales of apparel and accessories have also fallen, which is concerning because these items are low-margin. The profits are more affected by a drop in low-margin product sales. 

Opportunities In The SWOT Analysis Of Target

Target SWOT Analysis

  • Target looks to expand in the US. Target, one of America’s largest retailers, is seeking further expansion in the US by locating stores in densely populated areas. Target closed more than 130 Canadian stores to make way for expansion in the USA.
  • A strong presence on the online market: Target is in line with changing consumer behaviors that favor E-Commerce over brick-and-mortar retail outlets. E-Commerce sales are increasing rapidly in the US and worldwide. Target.com is well equipped to capitalize on this growth.
  • The private-label merchandise market is expanding rapidly in Europe and the US. Target has a large selection of private labels. Target will also benefit from the growing demand for private labels.

Threats In The SWOT Analysis Of Target

Target SWOT Analysis

  • Local CompetitionTarget is in a low-margin industry that is highly competitive. Its major competitors like Walmart, Costco, Kroger, Home Depot, etc. Many stores are located near the population which has an impact on their market share. Target began its holiday season sales in October to counter the stiff competition from Amazon’s e-commerce sector. Target also increased its Black Friday pricing to include nearly 1,000,000 more deals. As competition increases, the company will have to spend more money to keep up with them. This will impact its profits.  
  • Changing Customer Preferences Target Corporation’s performance could have severe negative consequences due to online shopping trends. Amazon and other competitors are increasing their growth, which is pushing Target Corporation’s supply chain management to include online shopping. While it might create growth opportunities, the expansion of Amazon’s logistics and timely delivery to meet changing customer needs may make Target less competitive in densely populated areas.
  • Target Corporation may be at risk if they fail to differentiate. Target Corporation may lose brand loyalty due to the shifting of many shoppers towards online shopping that is price-sensitive and emotionless.
  • Target sales are heavily dependent on macroeconomic variables. Target’s business can also be negatively affected by US economic turmoil, as most of their stores are located in the US.
  • Low Barrier of Entry – The retail business is capital intensive but easily replicable. Target prices can be beaten by any new company and they will take a large share of the market.
  • Market Uncertainties Uncertainties in Local and Global Markets Many retailers have seen their bottom lines affected by uncertain markets. Target has not suffered any significant changes, but the uncertainty forced Target to revise its expansion and projection plans. Due to market uncertainty, Target announced it would reduce its plans for store remodels from 3000 down to 300. 
  • Rising costs Target’s Q1 profit fell by 64% because of rising business costs. The company spent $500 million on safety measures, despite an increase in online sales of 141% and quarterly revenue rising 11.3% to $19.37billion. Its profits were reduced by the high cost of doing business, which led to a drop in net earnings from $795m in Q4 2019, to $284m in Q1 2020.

Limitations of SWOT Analysis on Target Corporation

The SWOT analysis is a popular tool for strategic planning, but it does have some limitations.

  • Some capabilities or factors can be both a strength or a weakness of an organization. This is one of the main limitations of SWOT analysis. If the company is able to develop products faster than its competitors, changing environmental regulations could be a threat or a benefit.
  • SWOT is not a way to gain a competitive advantage. It should not be a goal in and of itself.
  • This matrix is only intended to be a starting point for discussion about how strategies might be implemented. The matrix provided an evaluation window, but not an implementation plan. It was based on the strategic competitiveness and viability of Target Corporation.
  • SWOT is a static analysis – an analysis of the status quo that includes a few potential changes. The dynamics of a competitive landscape may change as circumstances, capabilities, threats, and strategies change.
  • The SWOT analysis could lead a firm to focus too much on one external or internal factor when formulating its strategies. SWOT analysis may not show the interrelationships between key internal and external factors. This could be an important factor in formulating strategies.

Target Corporation SWOT Analysis – Weighted

Due to the limitations of the SWOT matrix/SWOT analysis, corporate managers decided that each firm’s internal strengths and weaknesses should be given weightage. 

Organizations assess the impact of future events on company performance and the likelihood that they will occur. This is a Weighted SWOT analysis. This is more effective than a simple SWOT analysis.

Target Corporation managers can concentrate on the most important factors and ignore the rest. This solves the problem of organizations making too many lists, but not enough critical factors.

Conclusion

Target Corporation is a well-respected retailer in the United States, owing to its customer loyalty and the benefits of globalization.

Despite this, the entity must consider all aspects that could have negative consequences for it. This SWOT analysis of Target evaluates Target Corporation’s strengths, weaknesses, opportunities, and threats in each market.

Leave a Comment