Target: The Birth of Cool

Lady Gaga stunned the world when she came to the MTV Music Awards in a dress made entirely of raw meat. Her albums create singles like a wildfire, and even dreadful songs like 'Alejandro' went platinum in three countries. Lady Gaga is so influential, Hollywood has taken notice, and it is expected that fashions at this years Oscars, (the annual event where Hollywood gets together to stroke each others egos) will be significantly bolder (perhaps we will see Natalie Portman in a dress made entirely out of dairy products). Whatever Lady does, either in music or in fashion, she draws tremendous press, and today she released an new edition of her latest album exclusively at Target.

(Entertainment Newsweekly Feb. 25, 2011)

Why Target though? With revenues only one fourth the size of the market leader Wal-mart, surely Lady Gaga would have reached a greater audience, if she had decided to go with ole Sam Walton's spawn. Surely Best Buy, which specializes in selling items like music, would have been a more advantageous place to release an exclusive album.

The reason that I believe Lady Gaga chose Target over other options is fairly simple. Target is cool.

Target has created a a sizable and profitable retail niche by offering “cheap chic” fashion forward apparel and home décor products (On Target, Alice Z. Cuneo, Avertising Age 2000). Their exclusive lines of apparel and housewares from famous designers like Alexander McQueen have allowed Target to differentiate itself from other mass retailers like Wal-mart and K-Mart. Further, Target's products resonate with both style conscious consumers and value conscious consumers (Morningstar company report).

Wal-mart has not been blind to these developments. They have seen their sales growth slow to a crawl. Just recently, Goldman Sachs lowered it's target price on neutral rated Wal-Mart shares. Target on the other hand, while struggling like all other retailers has continued to be seen in a favorable light and has a buy rating from Goldman Sachs (Goldman Sachs Lowers Price Target on Wal-Mart (WMT), Sees Company's Pain As Target's (TGT) Gain, StreetInsider.com)

Wal-mart's jealousy over Target's successes can be seen in some of their recent strategies. In an attempt to mimic Target, Wal-mart launched exclusive clothing lines and cleaned up their stores in an effort to However, Wal-mart's “Metro 7” line of clothing flopped and that year they saw their same-stare sale rise only 0.5% down from their predicted 4%. What went wrong? According to veteran retail consultant Howard Davidowitz, "Wal-Mart is not cool." (http://money.cnn.com/2006/10/30/news/companies/walmart_setback/index.htm ).

Take a look.  

I'll let you decide if Wal-mart is cool.

So, my question is: How did Target get so “cool”?

Target wasn't always the cool brand. They were in the recent past, just another mass retailer. At some point though, Target executives choose this path, and I want to figure out how they made that change.

So, did they manage this transition? Here are some thoughts and questions:

• Does Target's success have to do with a cult following? Given that Target (or Tar-zhay as said with a faux French accent) has developed such a devoted following, how can Target continue promote customer loyalty in a time economic recession?
• Why did Wal-mart's attempt at “cool” fail?
• Is Target cool because Wal-mart isn't? (Is Target the Anti-Wal-mart?)
• What about Target's customer experience that keeps people coming back?
• How does a company change their personality from uncool to cool?
• Finally, what is preventing Wal-mart from making another attempt at seizing Target's “cheap chic” market segment which has proven to be profitable?