As one of the largest American department store chains, Target Corporation has multiple competitive advantages, including customer loyalty, quality products, efficient price policy, optimized supply chain and logistics, advanced technology, a disciplined approach towards business management, and commitment to innovations and sustainability. At the same time, the company’s potential allows it to enter the international market. The purpose of this paper is to create the transformation plan for Target for its expansion utilizing Kotter’s 8-Step Approach.
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Target Corporation is one of the largest American department store chains. This general merchandise retailer is known for its almost 2,000 physically large retail establishments located in all 50 U.S. states and the District of Columbia (“All about Target,” n.d.). Formed by G. D. Dayton in Minnesota in 1902, the company currently offers discount prices for a wide range of goods, from everyday essentials to luxury products (“Target through the years: 1900s,” n.d.). The company’s retail network currently includes hypermarkets, discount stores, and small-format stores. Food, beauty and health products, clothing and accessories, shoes, jewelry, electronics, furniture, toys, garden supplies, and small appliances are among the multiple types of goods that may be purchased in Target stores.
In general, Target has multiple competitive advantages that determine its growth and development despite global challenges, such as the pandemic. First of all, it has a highly strong brand and customer loyalty. As a matter of fact, local brick-and-mortar businesses are still in need, regardless of the fact that a substantial part of retail shopping has already moved online. In this case, Target stores are frequently chosen by customers as a preferable option and better experience for their set-up, general atmosphere, cleanliness, and optimized working processes (Pysh, 2017). In comparison with its main competitor, Walmart, Target has a better experience through marked and well-lit aisles, an elaborate floor plan, and better shopping carts. In general, the company pays particular attention to customer satisfaction by offering high-quality products and services.
Moreover, Target meets consumers’ expectations due to its efficient and effective supply management system and logistics, and its inventory turnover ratio continues to improve. The company applies various inventory management techniques and forms of replenishment, including vendor management, planning, demand forecasting, and seasonality, to minimize lost sales, spoilage, and inventory markdowns. At the warehouses, optimum inventory levels are maintained through a specific added inventory planning software, and the integration of robotic sorting systems for efficient inventory management is planned as well (Kapadia, 2020). Although Target underperforms these efficiencies in comparison with Amazon, it remains more productive, catering to both online and offline communities.
At the same time, the omnichannel Approach to sales provides a genuinely unique benefit to Target. On the one hand, its investments in the development of digital retailing were compensating during the pandemic. According to Target CEO Brian Cornell, “comparable digital sales have increased by more than 275% from a year ago” (Repko, 2020; par. 16). At the same time, the company refused to build a cost-inefficient network of e-commerce fulfillment centers and focused on its traditional stores as the fulfillment centers for digital sales (Bain, 2021). Due to this strategy, customers are offered several shopping options – they may order online with door-to-door delivery or order online and pick up purchases in the store or drive up. During the pandemic, the last two options gained popularity, and pick-up and drive-up volumes continue to increase. In general, the availability of multiple options for consumer satisfaction not only meets but exceeds their expectations as well as a highly positive impact on the brand’s reputation and raises customer awareness and loyalty.
Another strategy applied by Target in order to ensure its customers’ commitment and retention is Target Circle, the brand’s loyalty program. It does not require membership, provides an opportunity to win 1% rewards with every purchase, and offers exclusive discounts and birthday treats (Mottl, 2019). In addition, customers are attracted by affordable prices, a range of exclusive brands and private labels available only in Target, strong marketing campaigns, and sustainability policies. As a considerable number of people currently pay attention to environmental safety and the company’s ethical operation, Target aims to meet their demands by introducing the Target Sustainable Product Standard develop in partnership with vendors and industry experts to “establish a common language, definition and process for qualifying what makes a product more sustainable” (“Target through the years: 2010s,” n.d., para. 20). In addition, Target values its employees regarding their satisfaction as a key to its business success. The company’s human resource management focuses on staffing, organization culture, and employee development and retention to elevate its performance.
On the basis of Target Corporation’s analysis, it is possible to say that the company currently has multiple resources and capabilities for competitive growth and development. Its advantages include efficient price policy, quality products, optimized supply chain and logistics, a disciplined Approach towards business management, advanced technology, commitment to innovations and sustainability, and customer loyalty. However, Target is a company with the potential to enter the international market. In the present day, it covers almost all territory of the United States, and according to statistics, “75% of the U.S. population lives within 10 miles of a Target store” (“All about Target,” n.d., para. 1). However, its representation in other countries is insufficient – it has only 20 office locations globally, mainly in Asian countries, including Bangladesh, Thailand, China, Vietnam, Cambodia, and Indonesia, and one global capabilities center in India (“Our locations,” n.d.). At the same time, entering the international market may provide additional competitive benefits.
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At the same time, the inability of Target to operate on the global stage is determined by its poor-elaborated strategies that led to failure rather than the absence of attempts. From 2011-2015, the company undertook multiple efforts to enter the Canadian market, opening more than 100 stores across the country (Shaw, 2015). However, due to several reasons, this campaign was extremely unsuccessful and resulted in all stores’ closure. First of all, one of the main mistakes of Target in relation to this project was its fastest-ever retail rollout – in other words, the majority of stores were open simultaneously (Shaw, 2015). In this case, the retailer did not receive an opportunity to evaluate consumers’ reactions and whether working processes meet their demands. In addition, Target could not meet consumers’ expectations in pricing and the availability of items that were, at the same time, presented in U.S. stores. Nevertheless, the company’s opportunities allow it to enter the international market and be presented in various countries all over the world. For this, it needs a transformation plan may be elaborated on utilizing Kotter’s 8-Step Approach.
Kotter’s 8-Step Approach
In general, the 8-Step Process for Leading Change was created by Dr. Kotter, the professor of leadership and change management at Harvard Business School, as a result of observations of organizations and leaders for several decades. He identified factors that led to success when companies wanted to execute or transform their strategies and combine them into a particular methodology called 8-Step Process for Leading Change (“The 8-step process for leading change,” n.d.). All in all, he provided eight essential steps for the efficient implementation of any initiative for a successful change process (Rajan & Ganesan, 2017). The omission of even one step may lead to failure.
Step 1: Create a Sense of Urgency
The cultivation of the idea that changes are necessary should not be underestimated. For any transformation, a specific environment where people see an issue and know that changes will lead to its solution should be created – in this case, these changes will be supported (Weiss, 2016). Thus, the generation of conversation at all levels, especially among managers, will help to articulate and create the necessity of changes rather than a simple desire (AlManei et al., 2018). In the case of Target, the general meeting of the company’s management should be organized. The necessity to enter the international market should be explained through statistics related to the experience of transnational corporations, Target’s main competitors, and the company’s current characteristics that demonstrate that expansion is essential for stable growth and development. Subsequently, managers will be responsible for the transition of a sense of urgency to their subordinates (Rosenbaum et al., 2018). For instance, they may explain that entering the international market will provide new career opportunities and better working conditions for Target’s employees.
Step 2: Build a Guiding Coalition
As previously mentioned, changes should start with a group of people that support them and facilitate the spread of urgency throughout the company. For Target, a multi-purpose team for the guidance of entering the international market will be created. It will consist of leaders from various areas and departments with different skills and experience in order to maximize its efficiency. This coalition will collaborate, motivate each other, delegate tasks, spread messages, and ensure that the necessity of changes is supported.
Step 3: Form a Strategic Vision and Initiatives
In general, change initiatives may be frequently regarded as highly complicated, especially for the understanding of employees at the hierarchy’s lower end. Nevertheless, all workers should understand what changes are planned, why they should work for the achievement of particular goals, or what they should expect when changes are implemented. Thus, leaders will be responsible for the creation of a simple and understandable vision that will be translated to followers. In Target, managers at all levels will prepare presentations for meetings with subordinates. As leaders, they should be ready to respond to questions and doubts concerning the company’s expansion, take feedback, listen to individuals’ opinions or proposals attentively, and clarify how the company’s future will be different from the past in the case of changes.
Step 4: Enlist a Volunteer Army
When the vision is created and articulated, efforts should be undertaken in order to control the level of its support. In other words, in cooperation with colleagues, leaders will be responsible for continuous and positive communication of a vision for enlisting the most supportive employees. For this, their concerns should be understood to prevent or at least minimize resistance. Moreover, support for changes is essential at all levels, as in the case of its absence, the experience or negative message from competitors may impact transformation.
Step 5: Enable Actions to Remove Barriers
Barriers, such as inefficient processes, hierarchies, individuals, legislations, traditions, and physical obstacles, should be removed to enable actions, generate real impact, and facilitate transformation. In general, for Target, entering the international market will be a complex and long-lasting process, the next steps of which will be determined by the outcomes of previous ones. Thus, the initial actions will include attracting international customers by opening small retail outlets in international locations along with distribution and delivery channels for online sales. Thus, barriers that should be removed should include previous unsuccessful experiences and inefficient strategies that lead to failure while entering the Canadian market.
Step 6: Generate Short-Term Wins
It is essential to demonstrate small achievements and new process advantages to keep a vision being supported throughout the organization. Moreover, shorter small targets can motivate management to continue the transformation. For Target, the generation of short-term wins is especially essential as it demonstrates the efficiency of new strategies. In addition, the successful operation of stores in new locations will identify effective practices that should be implemented in the future for continuous expansion.
Step 7: Sustain Acceleration
In order to be stable, change processes should be continuously supported. In addition, long-lasting improvement requires setting goals and the analysis of their achievement. For Target, it is essential to realize that any successful change may be regarded as a slow and diligent process (Galli, 2018). Entering the Canadian market was extremely unsuccessful as the company accelerated all processes without analyzing whether they worked or not. In order to make the expansion successful in the future, Target should open a few stores in foreign locations and monitor its progress. Thus, if strategies that demonstrate their efficiency in the United States do not work in another country, the company may adapt them to foreign customers’ expectations and strengthen their loyalty before opening more facilities.
Step 8: Institute Change
Any transformation process will be successful if its principles are implemented in the organization’s culture. It is impossible to articulate a vision that does not correspond with the company’s core values. Thus, changes should be anchored through keeping senior stakeholders motivated, encouraging new employees, and supporting their positive attitude to change (Galli, 2019). In Target, there are multiple competitive advantages that make the company unique and loved by its customers. At the same time, its sustainable growth and development require continuous changes on the basis of its employees’ support and in-depth analysis of the current situation.
Target Corporation is a company whose successful operation in the United States allows it to enter the international market. However, its previous attempts resulted in failure due to inappropriate strategies. At the same time, on the basis of this paper’s analysis, it is possible to conclude that the company may adapt to changes and expand by utilizing Kotter’s 8-Step Process for Leading Change. Following its steps, Target should create a sense of changes urgency and build a coalition of leaders who support changes. Subsequently, leaders will be responsible for the articulation of a simple and understandable vision to subordinates at all levels. In addition, the company should analyze previous mistakes, elaborate on the strategies for further expansion, and generate small goals, the achievement of which will determine its next steps. Finally, the principles of continuous changes on the basis of the company’s employees’ support and in-depth analysis of the current situation should be implemented in its culture.
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Galli, B. J. (2018). Change management models: A comparative analysis and concerns. IEEE Engineering Management Review, 46(3), 124-132.
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Galli, B. J. (2019). Comparison of change management models: Similarities, differences, and which is most effective?. In T. Daim, M. Dabić, N. Başoğlu, J. R. Lavoie & B. J. Galli Eds.). R&D Management in the Knowledge Era (pp. 605-624). Springer.
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