Introduction
Management and organizational structure are some of key elements that contribute to firm success and competitiveness. The underlying type of management guides the strategy and operations of a company, while its structure contributes to the efficiencies and fulfilment of its day-to-day functions. Target Corporation is one of the most well-known big box retailers in the United States, distinguishable by its iconic red branding and a well-known customer service and in-store experience. Despite being a discount store by category, Target creates an upscale premium experience, ensuring returning customers and attracting more affluent consumers to the sector. This paper seeks to examine the management and organization of Target and determine potential means for improvement.
Background and Context
Target Corporation is general merchandise, big box retailer operating solely in the United States. It is the 7th largest retailer, with over 1931 stores around the country and 400,000 employees. It has $106 billion in revenue, with analytics suggesting that 8 out of every 10 shoppers are Target customers (Target, n.d.). The retailer sells a variety of products in different categories including clothing, electronics, beauty and health products, equipment, home décor and appliances, supplies, toys, furniture, and food. Target’s slogan is “Expect More. Pay Less” (Target, n.d.). This has gone beyond marketing and become a vision for the retailer, as it continues to be relatively affordable, offering a range of merchandise from other firms as well as many of its own created line-ups. However, it always seeks to raise expectations in quality of products and services. The target consumer for Target is typically more affluent, millennials or 35+, educated, family-oriented, and household income of over $80,000 (Reuter, 2022). Target’s management from the upper tier to store level are very hands on in their process, as they seek to stay ahead with providing the best experiences for the consumer. That ranges from offering the latest conveniences and technologies to customer offers to maintaining well-cleaned and bright store experiences (Reuter, 2022).
Analysis of Current Management and Organizational Culture
Target is known for fostering a highly tight-knit but welcoming organizational culture that has a reputation for being open-minded, forward-thinking, and customer-centric. The company is very purpose driven, not just at fulfilling its business goals, but also serving the community and being a place of joy for families to come and enjoy their shopping experiences. In order to create this environment, Target realizes that its employees are the most valuable tool. It offers a strong hiring and training program, continuous support for its employees, and provides significant opportunities for a rewarding career experience and development at virtually all levels. It is a “culture of learning” as Target offers more than 7 million training hours on the payroll annually, being invested into its employees (Frauenheim, 2020). The culture also fosters innovation and development of new ideas, as the company is known to adapt the latest trends and introduce uses of technology into the retail and wholesale sector. The company is also honest and transparent, owning up to any errors (such as a data breach that occurred) and maintaining the public trust (Plachkinova & Maurer, 2018). Management at Target greatly contributes to this attitude and approach to operations and employees.
Recommendations
As mentioned earlier, Target as a wholesaler sells merchandise from other sellers and brands, but with time has begun to introduce its own lines of products in categories of high demand, known as private labels or in-house brands. It has done so organically, and these products are generally more affordable, for both Target and the consumer, while being high quality for the price. These private labels generally provide more revenue for Target instead of reselling other merchandise from national brands for a mark-up. The recommendation is to continue expanding this strategy and introducing organically new in-house brands across various categories. However, more advertising should be aimed to make consumers aware that these are Target-associated brands, which will bring more demand due to associations of quality and customer-oriented needs from Target as a brand. Building in-house brands allows Target to retain control of quality, expand their margins, provide potentially innovative products, and sell across multiple channels, not just in-store. It helps to build brand loyalty in the long-term, and consumers that are satisfied with the in-house brands will return to Target exclusively.
While quality and price are major aspects for consumers, Target can expand its approach with what Gielens et al. (2021) call a smart private label strategy, which brings in other concepts such as technology, sustainability, and ethics. Using extensive big data, that Target already takes advantage of, the company can seek to understand the diverse needs of its consumers, and adapt the smart PL strategy towards it. Therefore, its private labels will not just be high quality and affordable, it will connect in some way, as an example, to sustainability critical to millennials. By pivoting to consumer trends and needs with its private labels, Target can achieve increased loyalty while offering the possibility of retail differentiation from other big box and wholesalers. Target should ramp up production of private labels and expand marketing to achieve widespread awareness in order to drive up consumer interest and profitability to address some negative aspects of the company’s business operations such as high debt and increasing competition online.
Goal
Goal: To introduce at least 5 new private label lines across 3 new categories of merchandise with ‘smart’ labeling elements appealing to social and consumer trends.
Four Functions of Management
- Planning – the step of developing a detailed action plan where goals are identified and a reasonable course of action and operations are determined in order to reach them, with a focus on a specific pathway and solutions.
For Target’s goal, planning will be necessary to study consumer data and determine the best potential categories, product lines, and trends to shift new private label production towards. Since developing a private label takes a lot of preparation and investment, the planning phase is crucial to attaining the correct information and drawing a plan of action.
- Organizing – takes the previous plan and puts into action, by identifying key steps to the project, finalizing stakeholders, delegating actions, and establishing communication, lines of authority, facilitating organization.
Target will take existing structures around private labels and build upon their foundation. It will likely structure based on category and product type, creating a hierarchy from head of the specific private label to floor managers.
- Leading – it is the stage of motivation and influencing the employees to upkeep the work to achieve the best standards and necessary performance indicators. Implementing any motivational techniques or boosters to attain set the goals is recommended while using the appropriate leadership style.
Target has hands on leadership which at this stage will simply evaluate quality and ensure that quality and performance are up-to-par with industry and Target standards. Target managers generally practice transformational and cause-driven leadership, which would be helpful to use to focus employees around a cause of a new private label launch.
- Controlling – the monitoring of performance of a project throughout its execution ensuring that corrective actions are taken and deadlines are met. This including focusing on operations and micromanagement such as staffing and budgets.
Target managers implement controlling measures on a consist basis to ensure standards are met. The company has a specific system of using data to track product production, logistics, and in-store locations. This can be improved for greater data collection to drive efficiency of operations and best practices adoption (Santoro et al., 2018). Target builds a lenient supply chain for its private labels using strong control through big data.
Conclusion
Target is an innovative big box retailer which has found success in the market through its quality of products and service as well as adaptation and use of technology. Overall maintaining a positive culture or management, it is suggested that Target expand their private label branding and marketing through their available assets such as technology. The SMART goal was proposed in the context of various functions of management.
References
Frauenheim, E. (2020). How Target creates a great workplace for millennials.Fortune. Web.
Gielens, K., Ma, Y., Namin, A., Sethuraman, R., Smith, R. J., Bachtel, R. C., & Jervis, S. (2021). The Future of private labels: Towards a smart private label strategy.Journal of Retailing, 97(1), 99-115. Web.
Plachkinova, M., & Maurer, C. (2018). Security breach at Target. Journal of Information Systems Education, 29(1), 11-20. Web.
Reuter, D. (2022). Meet the typical Target shopper, a millennial suburban mom with a household income of $80,000.Business Insider. Web.
Santoro, G., Fiano, F., Bertoldi, B., & Ciampi, F. (2019). Big data for business management in the retail industry.Management Decision, 57(8), 1980–1992. Web.
Target. (n.d.). All about target. Web.