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Target’s Missoni Moment

BY Marianne Wilson

The fashion and retail blogospheres went into overdrive with complaints about how Target botched the launch of its latest and exclusive limited time collection, Missoni for Target. And shoppers across the nation took to Facebook, Twitter and other sites to share their frustrations. The folks who seemed to be the most put-out were those who ordered goods online. After experiencing long delays and going through any number of hurdles before they were even able to place an order, many are now being told that their orders would be delayed or, even worse, canceled.

Target hasn’t said much beyond that it seriously underestimated demand for the Missoni collection. (I have to admit, I was taken aback by all the frenzy surrounding the Missoni-branded goods. When did the venerable Missoni house become hot?) But the fact is the retailer hyped the collection big time, with a brilliant marketing campaign that capitalized on social media and also included an attention-getting pop-up in Manhattan and a perfectly timed debut (Fashion Week).

In many ways, Target was the victim of its own success. The Missoni campaign — and the demand it helped generate —reflected the prowess of the chain’s marketing engine. But its marketing success came with a price, from empty store shelves to disgruntled online shoppers to the grumblings of industry techies who question whether the retailer’s revamped website is up to meeting heavy consumer demand.
People who didn’t score Missoni goods in the first couple days of the launch were largely out of luck, at least in the stores. A sign posted at the front of my local Target said it all: “Missoni is a Limited-Time Only Event. The available inventory is on the sales floor without further replenishment.” I disagree with those who say that the Missoni fiasco will put a dent in Target’s brand image long term. In fact, I don’t think it will even turn off many consumers in the short term. Shoppers, especially the fashionista types who this collection attracted, have short memories. Style usually wins out — even over poor service. And yes, there are important lessons to be learned here — the most obvious being that great marketing needs to be backed up by equally great supply-chain and techno execution.

But there is also a more basic lesson: When you have the right product at the right price, shoppers will open their wallets — even in an uncertain economy. In fact, buzz is already building over Target’s next guest collaborator, Jason Wu. The designer is a big fave of celebrities, including the First Lady. The limited-edition collection will launch on Feb. 5, 2012. I can’t wait.

On a related note, Target’s loss is J.C. Penney’s gain. The sudden departure of Target marketing guru Michael Francis, who left the chain to become president of J.C. Penney, leaves the discounter with some mighty big shoes to fill. He’s the man behind Target’s signature advertising and marketing campaigns and played a crucial role in establishing the chain’s hip, cheap-chic image. A longtime Target executive, Francis was appointed chief marketing officer in 2008 and, most recently, was overseeing Target’s expansion into Canada.

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Price leadership not so steady

BY CSA STAFF

Citigroup found that toy prices at both Walmart and Target fell by 4% and that the price gap between the two retailers on toys has narrowed since its first survey.

According to Ciitgroup, retail prices of a basket of “hot” toys for holiday 2011 are now 30 bps cheaper at Walmart than at Target, compared with 50 bps cheaper at Walmart in its previous survey. However, taking into account Target’s 5% rewards discount, the basket of toys became 470 bps more expensive at Walmart, compared with 450 bps more expensive in the previous survey.

While Target may be the competitor Walmart pays most attention to, Amazon continues to pose a threat, with its toy prices falling 6% during the same two-week period since Citigroup’s previous survey. Amazon’s basket of toys is now 650 bps pricier than Walmart, compared with 920 bps pricier for the prior survey.

Overall, Walmart continues to dominate on price, as shown by the fact that it had the lowest price on 45% of the items in Citigroup’s toy basket. Amazon had the lowest prices on 20% of items, and Target on 10% of items. However, Target shared the lowest price with AMZN and WMT on 15% of the items, while Amazon and Walmart shared the lowest price on 10% of the items.

When it comes to keeping the hot toys in stock, Amazon was never out of stock while Target and Walmart experienced one out-of-stock each, indicating that all three companies have invested in toy inventories to drive traffic and engage customers, Citigroup reported.

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Rite Aid comps increase 2.9% in October

BY CSA STAFF

CAMP HILL, Pa. — Same-store sales at Rite Aid increased by 2.9% in October, compared with last October, the retail pharmacy chain said Thursday.

The increase included a 1.3% increase in same-store sales on the front end, as well as a 3.6% increase in pharmacy same-store sales, including a negative offset of about 160 basis points due to the introduction of new generic drugs.

Total sales for the month were nearly $2 billion, a 2.8% increase over October 2010’s $1.9 billion.

For the first 34 weeks of the year, same-store sales increased 1.6% compared with the same period last year, including a 1.1% increase in front-end same-store sales and a 1.9% increase in pharmacy same-store sales.

Total sales for the year to date were $16.5 billion, a 1.1% increase over last the $16.3 billion in total sales during the same period last year.

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