Marketing in Action Case Real Choices at Target When can offering too many choic
ID: 331630 • Letter: M
Question
Marketing in Action Case Real Choices at Target When can offering too many choices become too much to efficiency. Amy Koo, an analyst with Kantar Retail, says, "In handle? Target has gone through a period of bad press as tery, everything can move faster, and they will have I a result of an unacceptable level of stock-outs that upset stuff in the system customers and decreased sales. The discount retailer believes that it can solve the problem by reducing the number of changes as well. Store shelves are being physically restruc- brands and varieties of product options on the shelves. Brian ured to hold more product, pushing inventory out of back- Cornell, CEO, believes that the increased efficiency will allow or more focus on priority categories "like wellness, stylish home goods, apparel, and baby products Target's supply chain transformation includes other rooms and onto the sales floor.Suppliers are being required to adjust case sizes (how many individual items are inside a shipped carton) to increase inventory turnover and decrease he number of times a store employee has to handle the Target's distribution process became more complicated with the expansion of its grocery business to include per- ishables like meat, fresh produce, and dairy products. Then, the situation became even more complex when it began allowing online customers to receive orders directly from its warehouses or pick up their online orders in stores. Because of the mess, Target has committed to redesigning its supply chain to make it more streamlined erchandise. In addition, Target wants suppliers to give a single-day arrival date for shipments to Target's warehouses, liminating the prior practice of a "grace period" that al- ws shipments to arrive a few days after the promised date without penalties. These and other changes will help Target achieve its goal of better inventory management S John Mulligan, chief operating officer, thinks that includ- g suppliers in planning and executing the transformation is Target has a rich history of success. In 1902, George Dayton founded a company in Minneapolis, Minnesota, called Dayton Dry Goods Company. Over the years the company also mean that everyone in the supply chain suffers. How well went through various retail format changes and in 1962, the th company uses this reinvigorated supply chain to deliver first Target store opened in Roseville, Minnesota. It called itself its value proposition to customers will be critical to its future the "new idea in discount stores" differentiated by merging key department store features with the lower prices of a dis- counter. Target became "a store you can be proud to shop in,J a store you can have confidence in, a store that is fun to shop and exciting to visit." The retailer is the third largest U.S. store key to success. Stock-outs not only hurt Target, the lost sales competitive success S 11-34. What is the decision facing Target? 11-35. What factors are important in understanding this deci chain, operating over 1,800 retail locations throughout the United States sion situation? Despite this lofty history, more recently growth at its 11-36. What are the alternatives? 11-37. What decision(s) do you recommend? 11-38. What are some ways to implement your recommen established stores has been hindered by unacceptable stock levels because of their overly complicated supply chain Target is spending more than $5 billion (yes, BILLION), to upgrade its distribution network and technology infrastruc ture to reduce stock shortages and facilitate the capability for online growth. In addition, the retailer is shrinking the number of different products it keeps in stock and reducing the number of sizes across those products. These changes WI dation? on: Phil Wahba, This is How Target is Solving Its Out-of-Stock Problems, Fortune March 2, 2016),http/fortune.comv/201603/02 arget-ir ventory(accessed May 6, 2016; Target rough the Years, Target, tps:/orporate.target.com/abou thistory/Target-through-the- years (accessed May 6, 2016); Nandita Bose and Nathan Layne, Target Gets Tough with Vendors to Speed Up Supply Chai. Reuters (May 2016), http/www.ruters.com/aticla/us-target-suppliers accessed May6, 2016; Nandita Bose Target Gets accessed May 6, 2016) in less overall inventory and improved handling 8Explanation / Answer
Key points of the case
Target is facing the decision of how to improve its supply chain and stream line it so as to improve overall efficiency.
Target's management initially faced the decision of selecting between brands and varieties of product options to be made available on shelves. Overall, they decide on reducing their choices and improving inventory storage and handling.