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Target’s Revamped Store Customer Experience Experiments: Culturally, Are They On-Target or Off-Target? 

Michael Lowenstein, PhD, CMC | Jul 3, 2017 1,080 views 7 Comments

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Store Employee Interacting With Customer

Store Employee Interacting With Customer

Target Corporation has had a number of challenges over the past few years, from abruptly closing all of their Canadian stores to a 2016 earnings shortfall, plummeting stock price, and a rather negative sales outlook for 2017 (first quarter EPS was 6% lower than first quarter 2016). The company is forecasting a single digit sales decline for the full year.

So, how does Target intend to bring about a performance turnaround? The company is taking aim at a revised store experience for customers. Target has invested $220 million to remodel and renovate 28 stores in North Texas. According to Target spokespeople, the remodels will emphasize “inspiration, discovery, style, and ease”. Among the changes:

– Top-to-bottom overhauls, with new design/style elements and product presentations (based on what customers said they liked about Target’s new stores)

– Two entrances, one that promotes exclusive and seasonal items, the second for Online Order Pickup and quick purchases, such as for groceries (see below)



– More attractive merchandise presentations, including “updated mannequins and fixtures in apparel, home and beauty”.

– Easier in-store shopping flow, with aisle modification designed to encourage customers to browse through apparel, accessories, and other products.

– Updated, more engaging grocery department, with “grab-and-go food and beverage options”, with fresher products, more choice, and greater convenience

– Target’s Online Order Pickup located at front of store, for faster, more efficient, check-out

– Wine and beers shops inside the store

In all, Target plans to fully redesign 110 (out of their 1,800) stores in 2017 and 500 in the next three years. This is a significant corporate initiative, with cash investment running into the billions of dollars.

Apart from design, product, and other store elements, Target is also investing in technology which will enable store employees to more efficiently search inventory and also take payment from mobile point-of-sale devices.

While all of this reads well, the planned modifications are the kind of inside-the-dots, rather conservative approaches most would expect from a mass discount retailer in search of customer experience enhancements. Here’s my question, and my key issue. Beyond these “inspiration, discovery, style and ease” changes, how is Target, in parallel, evolving its store culture to generate more interaction with, and commitment by, employees?

I’m an active grocery and discount department store customer. Among stores I frequent are Target, Wegmans, Trader Joe’s, and Costco. Where employees, and their commitment to customers, are concerned, the Target store experience will (likely) never equal Wegmans, Trader Joe’s, or Costco, but, Target could certainly take some lessons from the store cultures of these successful retailers.

Because Target will now be looking to place increased focus on groceries, I’ll use Wegmans,Trader Joe’s, and Costco as my reference points. Rochester, New York-based Wegmans, has succeeded in creating an almost cult-like bond with its customers. The company, which is well-known for its food selection and quality (you can even custom blend your own trail mix), and for its empowered, well-trained and proactive employees, has been named the best supermarket chain in America by Consumer Reports; and, yes, it certainly might be the best retailer on the planet.

1. Wegmans. Wegmans has constructed and sustained a stakeholder-centric culture where the customer truly comes first, and customer experience is the barometer by which it measures success. For example, the retail grocery industry (and the discount department store industry) is normally associated with fairly passive and reactive customer service; but, like Whole Foods Market and Trader Joe’s, Wegmans’ employees readily make themselves available to help customers (who Wegmans refers to as “guests”) find what they want, and often make recommendations for what they think the customers would like. Do Target’s store employees do anything like that? If so, I’ve never heard of anyone experiencing it, nor have I.

Speaking on a personal level, at Wegmans shopping is not a chore and is often pleasurable. Stores are attractively laid out, almost like an old-world open-air market. There are tea bars, multiple eat-in options, and chef-prepared breads and meals to take home. When shopping there, rather than rush through, the inviting atmosphere makes it enjoyable to take my time, relax and experience what the store has to offer. Better for me, and better for Wegmans. Will the reimagined Target store experience do that?

Wegmans also does other things to set itself apart, and in positive ways. From a merchandising and reputation perspective, they are seen as active members of the communities in which they operate. They were one of the first chains to purchase from local vendors. Does Target do that? Don’t think so.

The chain supports local causes and events. Wegmans represents conscious capitalism, in the truest sense of the term, further building the bond between the enterprise and the customers, many of whom consider Wegmans ‘their store’

They also offer new technologies, such as the interactive recipe and shopping list feature on their web site, and an iPhone app that helps shoppers organize their purchase list on an aisle-by-aisle basis in the store – all to enhance the shopping experience. Is Target including that in their technological upgrades? Don’t think so.

2. Trader Joe’s. Shopping at Trader Joe’s is truly a branded customer experience. Each store has a light-hearted South Seas island theme throughout, including the Hawaiian shirt garb of store staff. Employees at their Monrovia, CA headquarters often served as a ‘tasting panel’, and they help determine which new products will be stocked in the stores; and, with tasting locations at each store, customers get to give the final stamp of approval, or rejection, by ‘voting with their taste buds.’ This is also a device for bonding with customers at the store level. Even though Trader Joe’s stocks about 3,000 items, compared to the average supermarket’s 30,000 items, sales per square foot are typically two to three times that of chain supermarkets.

What has made Trader Joe’s so successful — apart from wage and benefits packages, and opportunities for advancement, well above most companies in the supermarket industry – is the sense that employees are the brand, its communication style and fun, upbeat culture. Employees are selected and trained to multitask, and everyone seems to enjoy what they do. They deliver a great branded customer experience, and they stay (voluntary turnover is only 4 percent) because they enjoy working there and because the organization is thriving.

3. Costco. Going to Costco is not an especially exotic experience, and yet shoppers often describe their visits as “fun.” Costco pays their employees a lot more on average than most retailers, enabling the company to keep turnover much lower than other retailers. Employee behavior, often identified as smiling, friendly and helpful, actively contributes to positive in-store customer experience; and this helps enable Costco to maintain focus on their original strategy – low margins, low overhead, big profits.

So, in Target’s revamped store customer experience experiment, which will soon be rolled out as a major test and downstream strategy, is the store culture, and linkage between customer experience and employee experience as Wegmans, Costco and Trader Joe’s do so well, also being included? Is this strategy on-target or off-target?

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7 Responses to Target’s Revamped Store Customer Experience Experiments: Culturally, Are They On-Target or Off-Target?

  1. Russell Ewert July 31, 2017 at 7:19 am (3 comments) #

    Michael I don’t know if the changes at Target will work and there are no Wegman’s in my area but I do frequent Costco and Trader Joe’s.

    My experiences at Target are far different than yours. I have had employees drop what they were doing to walk me over to the item that I was looking for or go in the back to find an item that was not on the shelf, opened cashiers so I didn’t have to wait in line and provide numerous recommendations on products. The stores I most frequent are in Highland Park and Niles and the employees at those locations deliver a very positive customer experience.

    All companies in this space are going through a transformation and will continue to need to make changes or become irrelevant.

  2. Michael Lowenstein July 31, 2017 at 11:44 am (1317 comments) #

    Russell –

    Thanks for your comments.

    At Target stores that I frequent (NJ/PA/DE Delaware Valley), the employees did what you’ve described once upon a time. Those days are long gone. Now, when I question the store staff about an item, they just give me general directions to the area of the store where it might be found; and then they go on their way. It’s the kind of vanilla, passive experience which might as well be in a Walmart, KMart, Sears or any other commoditized, low-priced department store chain.

    Agreed that this is a pivotal time of transition and transformation – and opportunity – for retailers. Most are sliding down the slope toward irrelevancy because they have not tapped into the emotional side of customer experience and value delivery.

    Michael

    ,

  3. Bob Thompson July 31, 2017 at 11:57 am (226 comments) #

    Not sure I agree that Target should try to become Trader Joe’s or Costco. I don’t go to Target for the employee experience like Trader Joe’s, but I still shop for a good selection and good pricing. The changes outlined make sense and support that brand experience.

    Don’t shop at Costco very much, but when I do it’s not for employee help, either.

    I do think that committed/empowered employees (serving customers) are important but that doesn’t mean equally important in all business models.

  4. Michael Lowenstein July 31, 2017 at 1:16 pm (1317 comments) #

    Bob –

    Thanks for your comments. I’m not postulating that Target try to copy the Trader Joe’s, Costco or Wegman’s store experience, just that they’d be wise to take a few pages from the playbooks of these chains. Commoditized customer value delivery in this business sub-sector relegates Target to what we are seeing from Penney’s and Sears, i.e. a vanilla, non-memorable experience.

    What I am suggesting is that, as Target works to recast the store experience, the chain would do well to make employees a more active and inclusive element, recognizing that this involvement also enhances the employee experience What Russell Ewert was describing in his Chicago-area Target store experience is what I also used to see – store employees were considerably more ambassadorial in their behavior and interactions with customers.

    Michael.

  5. Andrew Rudin August 1, 2017 at 7:48 am (240 comments) #

    Hi Michael: Target has most likely implemented these changes as a response to customer feedback, as you pointed out in the first item you detailed regarding their upcoming changes. While I think it’s worthwhile for most businesses to consider using strategies and tactics used in other industries and companies, they don’t always transfer. For me, there are some nice things about traveling on Amtrak to New York City, but I don’t expect the same benefits when I fly. Trains and planes both move people between cities, but operationally, they are wildly different. My guess is that people who come into Target to buy motor oil, bags of candy bars, and 12-packs of kids tube socks are not craving the same sensory experiences that Trader Joe’s delivers. Lest I forget, I should also mention that Target shoppers rarely need to wait for a parking space or to park across the street from the store. Real estate and pavement play a huge role in their business model.

    Although Target and Trader Joe’s are both retailers, and both sell grocery items, they share few other significant attributes. TJ’s has 38,000 employees and 465 stores, whereas Target has 341,000 employees and 1,802 stores. Based on that alone, I think it would be overwhelmingly complicated for Target to attempt to deliver the same studiously-quirky experience customers get at TJ’s. And for what purpose, IF customers aren’t looking for those interactions anyway?

    More details about the opinions of Target’s focus groups and the results of their market research would make it easier to judge whether the company’s change initiatives you described portend greater sales.

  6. Michael Lowenstein August 1, 2017 at 11:32 am (1317 comments) #

    Andrew –

    We don’t know what insights Target did, or didn’t, have as a basis for making the changes. What we do have are what has been reported, and that does not appear to impact either employee behavior or the store-level culture. Also, re comparing retailers and their approaches to CX, it is far less about scale and far more about intentions and the effectiveness of actions.

    Michael

  7. Alfrieda White November 12, 2017 at 2:06 pm (1 comment) #

    Upon leaving my vacation at Massanutten resort, my family and I stopped at Target to do some shopping. I had a good time shopping and had plenty of help from the staff who help me with picking out my clothing and going to the clothes rack numerous times. Many times at stores you don’t get much help but did at the Harrisonburg store in VA.where the store workers are very nice. Also, when are arrived home in Washington DC, two pairs of earrings in my target shopping bag were missing. I called back to the target and was told to contact the store in my area and see if they would allow me to get the two pair of earrings, but the manager was kind of cold and said no I then called back to Target in Harrison burg corporate office where the problems was handled where they agreed to send me a target gift card.in the maiI. I am so thankful they we have good stores like the one in Virginia who care customer satisfaction!

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