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Monday, Jun 18, 2018
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Mullins: Target's woes go far beyond the data breach

If only the data breach was Target's only problem.

The retailer that once turned heads by selling a Michael Graves teapot and became known as “Tar-JAY” (pronounce that with a French flair) has a whole lot of what management consultants call “opportunities to improve” — i.e., disasters to fix.

Let me confess right up top that we're huge Target shoppers. Nearly every consumable item in our house comes from either Publix or Target. If I took a job at Home Depot, my family might have a closed economic loop among the three stores.

But sadly for Target, the data breach was only the latest in a string of uncharacteristic stumbles at a store where pretty much everyone I know can walk in needing a new bath mat and walk out $200 later with a cart-ful of things they didn't know they couldn't do without.

Talk to retail experts — or your friends — and you'll start collecting stories about things off target at Target. I once took a photo of a Target security guard golf cart parked inside the store, directly in front of a fire exit marked “Do Not Block.” I told the managers, and they said, “Meh.”

“Target was always regarded as being incredible marketing innovators,” said Doug Stephens, a Canadian-based retail consultant and author. “They had the ability to find unique collaborations and product development stories that made them look neat and cool, and for a long time things were pretty good.”

Once the economy tanked, Stephens said, “consumers reacted by going to Wal-Mart and a lot of the creativity went away at Target.”

Though largely unnoticed in the U.S., the expansion rush that Target recently made into Canada recently was a disaster, Stephens said. Rather than build fresh new stores, Target bought an existing retail chain, oddly renovated locations, then kept much of the old stores' inventory around, so Canadians didn't know who Target was really trying to be. That's amazing, given Target at one time could teach Harvard business classes on brand identity. Worse, Stephens said, as many stores opened with empty shelves because Target executives wanted inventory so lean, Target became a punchline in Canada. As Motley Fool points out, “Last year the company generated sales of $1.3 billion in Canada and somehow managed to lose $941 million.” Ouch.

Here in the states, I've noticed a few problems just as an average shopper.

Basic math, for instance. For more than a year, Target had an Old Spice body wash bottle on the shelf priced at $2.99, or you could “Get Two At Once” for $7.59. Yikes! Someone go to the office supply aisle and buy Target managers a calculator.

Target also tried a project to infuse stores with new, independent products called “The Shops at Target,” in which local soap makers, dog leash makers, fashion designers or anyone else could audition to get on the shelf at Target. Though it was a “store with a store” concept, I found it odd. Instead of putting independent things together, they were scattered around the store, with small signs to tell you these things were independent items, but not those. How was that different from other quirky, independent products like J.R. Watkins soaps or Beneful brand dog food? Who knows? Maybe one item was more independent than another. Target pulled the plug on the project in March 2013.

Personally, I found the Neiman Marcus and Shops projects valiant ideas worth trying. Perhaps the items just didn't move the needle compared to mega-sized products from Unilever and Procter & Gamble.

Which brings me to Wal-Mart and Amazon.

“The world has changed a lot since that old Target strategy of fun design began,” said Barbara Kahn, a Wharton School marketing professor. “Now we're playing in a world where Amazon and Wal-Mart are really working hard to bring an online/offline strategy to life.”

Amazon is getting into every business concept on Earth. Not just dry goods online, but fresh grocery delivery in more markets. It's on a tear signing up people for Prime memberships, and I just spotted one astounding data point from Parks Associates. Fully 20 percent of people in America with a broadband connection have signed up to use the Amazon streaming media app on their TVs, computers or tablets. That's insane! From zero a couple years ago, Jeff Bezos now has a direct connection into the living rooms of one in five Americans with broadband, and the growth rate is 55 percent a year!

The Amazon drone delivery prank got some chuckles (it was a prank, right?), but Amazon is adding “lockers” in more markets, where Amazon will drop products the same day or overnight.

Then came the data breach. Beyond the horrific customer debacle it was, I found it revealed two massive issues.

One, Target had infuriated its most loyal customers — those with REDcard debit or credit cards. That's bad enough. But two, the breach revealed how disconnected the stores are from the company overall. Anyone who went to the customer service desk with a data breach question was simply told “Call the company. Here's the 1-800 number.”

Can you imagine that kind of brush off from Nordstrom or Neiman Marcus staff? Not a chance. They'd make you a latte and give you a pedicure while fixing the problem.

Worse, the data breach is overwhelming anything interesting Target is trying.

Did anyone but me notice it just started a product “subscription” service? If you sign up, Target can ship you any of hundreds of products on a pre-set schedule, with free shipping and 5 percent off with your REDCard. Diapers, paper towels, whatever.

But again, there's a disconnect with the stores. If that project is so important for Target, why aren't there HUGE signs on the shelves that say “Need these diapers? We'll ship them to your house every week. Here's how.”

Target's CEO resigned this last week in the wake of the data breach. I'm sure the incoming person (whoever that is) will have plenty of suggestions on his or her desk. Here's one assessment that's a bit rough for a company that had been seen as such an innovator.

“Wal-Mart and Amazon have really been moving ahead,” Kahn said. “That leaves Target to play catch-up.”

Meanwhile, here's other retail, restaurant and trend news around town:

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For all the effort we humans put into trying to make rational, sensible and practical decisions, sometimes we just don't.

Time magazine recently pointed out a Cornell University study that found people enjoy food more if they pay more for it. Researchers tested this by charging one group of people $8 for an all-you-can-eat dinner and another group $4 for the same dinner. People who paid the higher price enjoyed their meal 11 percent more. Think about that the next time you drop $50 or $100 on a steak dinner.

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Last week, I wrote about the case of a Seffner man, Jason Humphrey, busted by the feds for allegedly using an illegal cellphone jammer while making his daily commute to Tampa. The offense could cost him $40,000. The article prompted this note from a reader in Durham, N.C.: “Someone should launch a Kickstarter fund to pay Jason Humphrey's fine. His only mistake was having too powerful a jammer so that the cell tower got knocked out. All he needed was a jammer powerful enough to knock out a zone 4 car widths wide by 20 car lengths long to give him a safe zone around his car. If enough people used such jammers, maybe authorities would get the message and have drivers using cellphones while driving arrested for DWI [Driving While Impaired].”

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If you're an Angie's List member, you may have recently received an email about a class action lawsuit against the company. It's complicated, but there was a suit against Angie's List over how it charged people recurring membership fees. Like most mega class-action suits, the settlement means just a few bucks for those people actually affected by the offense. In this case $5. For more details, go to ALSettlement.com.

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