The Challenge Ahead.? In order to win Holiday, develop a strategy to deliver a compelling assortment and innovative omnichannel shopping experience throughout the entire season. As you

Kids Holiday Gifting Strategy.

Situation Analysis.

This case presents a scenario with a hypothetical challenge. Approach it as if you were a Target

team member.

The importance of the Holiday shopping season to retailers cannot be overstated. A disproportionately

high amount of Target’s annual sales occur between Thanksgiving and New Year’s Day. This crucial

time of year has become hypercompetitive with retailers battling for sales in stores, online, and any

device with a Wi-Fi connection. In an attempt to gain an edge, retailers are kicking off Holiday sales

events earlier each year. Consumers are savvier than ever using technology to find and research the best

gifts at the best price and delaying purchases until later in the season to ensure they are getting the best

deals. The resulting Holiday sales pattern has been bookended with strong sales at the beginning and

end of the season with relative weakness in the middle of the season.

Retailers now must find a way to stay relevant throughout the entire Holiday season by offering

differentiated shopping experiences that engage and inspire not only during key sales events like Black

Friday, but also during these soft spots in the seasonal period.

Kids’ products, including those in Toys, Electronics and Entertainment, account for a significant number

of sales during the Holiday season. In fact, CEO Brian Cornell highlighted Kids as one of four signature

categories that Target will “be famous for.” Why? Kids play a major role in what parents buy, and

where they buy it. 84% of parents say their kids help decide where they shop. That’s influence.

Clearly, winning with Kids’ categories is critical to Target’s overall success, not just for the Holiday

season, but for the entire year.

The History of Target. Minneapolis-based Target Corporation (NYSE: TGT) is a publicly-owned Fortune 40 company that

currently serves guests across the U.S. as well as at Target.com. Target had $72.6 billion in annual sales

in 2014.

The first Target store opened in 1962 in the Minneapolis suburb of Roseville with a focus on convenient

shopping at competitive discount prices. Target currently is the second largest general merchandise

retailer in America, with Target.com consistently ranked as one of the most-visited retail websites. The

company continues to deliver on its brand promise of “Expect More. Pay Less.” Since 1946, Target has

Case study

given 5 percent of its profit to communities, that giving today equals more than $4 million a week.

Corporate Responsibility magazine has named Target on its “100 Best Corporate Citizens List.”

Today Target has nearly 1800 stores and 38 Distribution Centers in the United States, all of which are

supported by nearly 350,000 team members worldwide.

For Target, the guest is at the center of everything. The company is continually developing new ways to

serve the guest anytime, anywhere – including rolling out store pickup, launching a Cartwheel digital

savings app, opening flexible format stores and offering Target Subscription services.

Target has offered guests a digital shopping experience, via Target.com, since 1999. Additionally,

Target’s mobile experience is increasingly becoming the front door for Target guests as the majority of

digital traffic comes from a mobile device. Target has been named Mobile Retailer of the Year twice,

and in the first quarter of 2014, had 2 of the Top 7 Most Downloaded Mobile-Commerce Apps –

Cartwheel and the flagship Target App. In an effort to boost digital sales during the 2014 Holiday

season, Target was the first retailer to offer free shipping on all online orders from October 22 to

December 20.

Kids’ categories span everything from iPads to Tonka Trucks to Nintendo video games to Frozen DVDs.

In order to provide an exciting and differentiated assortment, Target has pursued partnerships with its

toys, electronics, and entertainment vendors to offer exclusive products during the Holiday season. In

2014, over 20% of its toys offerings were exclusive. Target has also attempted to offer differentiated

shopping experiences as well.

Target launched a Wish List app as part of the Kids 2014 Holiday strategy. The app allowed guests to

build their gift lists for the season in a fun, engaging way, and interact with the Target brand in new

ways, helping cement Target as the destination for Kids gifting during the Holiday season.

The Guest [Consumer].

It’s not just about Mom anymore; it’s about the Demanding Enthusiast. These are Target’s core guests,

and they’re digitally connected families who enjoy shopping and demand great value. Typical

guests have kids in the household and lots of demands on their time, and are likely to live in urban areas.

These guests actively shop in-store and online and are early adaptors of new technology, shopping with

one hand on their cart and one hand on their smartphone. They enjoy shopping and want to tell their

friends, remaining engaged with social media while shopping and sharing their feedback and

experiences online. They are often influenced by others and share their findings to influence others.

Guests love Target for its newness, its product assortment and its value.

In addition, the millennial generation is an important segment to Target. According to a 2014 Yahoo

Advertising article, this generation, currently entering the family life stage, comprises 27% of the US

population, is more diverse than any previous generation and on average will check their smartphones

43 times a day. When it comes to shopping, 71% browse online but do their actual shopping offline, and

52% prefer to browse on mobile devices. Millennials do their homework before selecting a store and

know what they want when they arrive. Their expectation is that brands are channel agnostic: 60% say

the consumer experience should be consistent across online, store and mobile.

Finally, while browsing and making decisions are a large portion of the guest experience, today’s

consumers demand great value as well as convenience. They have a wide range of retail choices, and

are willing to hunt to take advantage of the best price, and are comfortable making spontaneous

purchases. Retailers have answered this trend by partnering with mobile payment applications and

shortening the number of steps required from browse to checkout, both digitally and physically. In terms

of obtaining the purchased product, free shipping and in-store pick up are becoming increasingly

important for online transactions, as well as length of time until product is received.

The Competitive Landscape.

Other players in the market that may be helpful to research on this topic include Walmart and Amazon.

The Challenge Ahead.

In order to win Holiday, develop a strategy to deliver a compelling assortment and innovative omni-

channel shopping experience throughout the entire season. As you consider your strategy, make sure to

consider how to drive sales and traffic consistently through the season. Your strategy should effectively

leverage sales channels (stores/.com/mobile) at various points throughout the season. Use the

framework of the 4 Ps to brainstorm ideas for how you would approach this challenge as a buyer within

one of Target’s Kids’ categories.

1. Product / Assortment: How should Target differentiate its assortment online and in stores?

Would you offer channel-specific product exclusives? Why?

2. Price: How will your pricing strategy differ by channel, if at all? Determine a profitable

pricing strategy for the entire season. When is it important to price aggressively?

3. Promotions: How will your promotional cadence vary throughout the season? How and

when will you leverage stores/.com/mobile to drive your strategy? How will you deliver

relevant promotions during the middle of December? How can you create an omni-channel

promotional event and what is the best timing for this? What tools will you use or develop to

support your promotions (think Cartwheel, Twitter, Wish List, Instagram, Facebook, etc.)?

4. Place / Supply Chain: How will you use Free Shipping, Store Pickup and Ship from Store

to differentiate and drive your strategy?

Other Considerations for this Challenge:

• Product Categories: Kids’ categories span many product categories at Target. What categories

should Target prioritize for Holiday? Are there certain categories that are more appropriate for

stores or Target.com? Why? Pay special attention to categories where Target can differentiate

itself from the competition. Are there certain Kids categories Target doesn’t carry that it should?

• Team: How should digital and store buyers approach decisions about assortment, pricing, and

promotions? Remember, the guest demands consistency across channels. What other issues

might you consider in planning with buyers in other departments and categories?

• Stores: Remember to consider store execution in how your strategies will be implemented. Are

there risks you should consider? In what other ways can you use store team members to help

drive an omni-channel Holiday strategy?

• Marketing: How should Target engage guests, and in what channels, to advance your Holiday

strategy? Think of the many touch points guests have with the Target brand and consider which

of these touch points is most impactful during the Holiday season. Also consider the channels

where consumers are going to get gift ideas and inspiration. (Think print media, sites like

Pinterest, and other mediums).

If you would like to select a specific category within Kids, feel free to choose from the divisions below:

• Electronics: Mobile, TV/Audio, Portable Electronics, and Video Games

• Toys: Dolls/Plush, Games/Action Figures/Diecast, Preschool/Seasonal

• Entertainment: Music, Movies, and Books

Frequently Asked Questions.

Are there other competitors to be aware of?

While Amazon and Walmart are the biggest, take note of specialty retailers like Air Traffic and others

with a more curated toy and gift selection. Macy’s and Kohl’s are also key market players during the

Holiday season.