The trouble with Target

Target would appear to have ongoing problems beyond disappointing financial results, is the observation financial analyst Maggie Gilliam made in the most recent issue of her monthly newsletter, Gilliam Viewpoint. She touches on the uncertainty surrounding the company’s credit card receivables and notes that, throughout its history, Target has vacillated between going for margin and emphasizing pricing to gain market share. “The prolonged stretch of economic growth prior the current recession enabled the company to gain market share while in a trade-up mode,” according to Gilliam. “As a result, the company has lost any consumer perception of low prices. Getting out of this bind is going to require more than putting more consumables in the stores.” It should be noted that Gilliam is a longtime proponent of Wal-Mart, but even so, her comments are valid as she highlights a looming issue related to Target’s ability to grow long term. “Target is a retailer that essentially operates a single concept that is running out of space to grow domestically, and the company is far behind the other leading retailers, specifically, Wal-Mart, Costco and The Home Deport in developing internationally.”