Walmart in particular has been gaining steam through innovating with new platforms and differentiating itself in marketing campaigns.
“They’re getting attacked at the bottom by retailers who are better at price,” the executive said. “Target is in this uncomfortable middle because they’re also not an affordable luxury to compete with Sephora and Coach.”
Target is pulling back on some of its partnerships with high-end brands. For example, Target and Ulta Beauty will end a five-year deal this month that placed Ulta shops in Target stores. However, a new deal with Warby Parker is expected to set up five pop-up stores in the second half of this year, according to Target.
The result is a slipping in-store experience for customers including long lines and missing products, said Sucharita Kodali, retail industry analyst at Forrester.
“There is not inventory in the store—there will be empty shelves where paper towels are supposed to be,” Kodali said. “One of the main reasons that people go to Target is to get staples like paper towels. When they don’t have that, that completely deters people.”
Brad Jashinsky, director analyst at Gartner, said that improving in-stock items and keeping stores clean could be difficult for Target.
“This sounds simple but requires a careful coordination between local, regional, and corporate staffing, including merchandising and operations,” Jashinsky said. “Staffing levels need to improve, training programs should be expanded, and every team needs to be measured to ensure these problems don’t continue.”
Fiddelke acknowledged the problems with the in-store experience when speaking on Target’s recent earnings call. He said that Target’s on-shelf availability metrics during the second quarter, “were the best we’ve seen in years.”
“We can never take for granted the love our guests show us when they affectionately refer to their local store as ‘my’ Target,” he said. “That’s loyalty we need to consistently go out and earn—from well-stocked shelves and clean stores to a friendly and helpful team and an online experience that brings inspiration and discovery, we want to delight our guests who shop with us every time they shop. As I’ve made clear, we have to do better here, especially in the consistency of our experience.”
