final analysis v5

8/3/2019 Final Analysis v5

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Strategic Analysis of Target.com

Daniel Norris

STRATEGIC PROBLEMS

As the smoke clears from the housing market crash, it is becoming evident that things may not

be settling back into their pre-recession norms. In particular, Target Corp. has found itself struggling to

reclaim market share that, even now the firm is losing to competitors. Market share in apparel is moving

toward companies such as Kohls, Macys, and JCPenney, while market share in other general

merchandise is moving toward companies like Bed Bath & Beyond. In addition, Target is losing market

share across many areas of its business model to archrival Wal-Mart (Zimmerman). It is also highly

probable that discount stores such as Big Lots will hold on to much of the customer base taken from

Target during the recession (24/7 Wall St.).

One area, in particular that the firm suffers in is its online retail portion. Target.com has seen

marked underperformance when compared beside large retail competitors including Wal-Mart and

Amazon.com. Because web technology is so prevalent in todays dynamic landscape, it is important that

Target approach this issue purposefully. Specifically, the growth rate of Targets online sales and online

sales versus total online viewers should be taken into account.

At first glance, it may appear that Targets online sales as 2% of total revenue is impressive

compared to Wal-Marts 1.5% of total revenue (Figure B1); however, several other factors shed light on

serious problems with Targets current approach to its online sector.

First, consider the annual increase in Targets online sales. Growth in this area in the last year

averaged 10% (Enright). Compared to Wal-Marts 17-22%, and online retail giant Amazons 40% (Boyle),

the growth of sales at Target.com has been sub-par at best (Figure B1). Such a disparity is often the

result of many root causes, and this case is no different.


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ROOT CAUSES

Target.com attracted an impressive 27.2 million unique visitors (Arbesman) in 2010. Of the

competitor firms previously mentioned, only Wal-Mart and Amazon top that figure with just over 32

million unique viewers (Miller) and approximately 110 million unique viewers (Google Ad Planner),

respectively. In fact, of the seven firms compared, Target ranks fifth in terms of sales per unique viewer.

The same figure for Kohls, Macys, and Wal-Mart three firms with a mix of retail channels similar to

Targets range from two to four times greater than Targets figure of $48.90 (Figure B2). This is a clear

indication that, while Target is attracting visitors, something is occurring between the time the average

visitor accesses the firms site and the time that visitor exits the page.

A primary source of its weak sales-per-unique-viewer figure is Target.coms user interface,

which is incontrovertibly lacking in several fundamental areas. All of these combined serve to create

user confusion, increase the number of necessary clicks to navigate to certain critical components of the

overall online shopping experience, and cause Target to lose sales from unique viewers who may

otherwise have made a purchase. Throughout the remainder of this analysis, it is important to keep in

mind that, without the investment in time, gas money, and energy required to travel to the store and

physically fill a cart with products, online shoppers have far less to lose by abandoning an e-cart than a

real one.

To begin, there are two main inconsistencies with the sites layout. The first is the categorization

of products in the root menu contained within the sites header. The first four links categorize products

by their targeted consumer. Conversely, the remaining links categorize products by product type (Figure

A2). The second inconsistency on the site is in regards to its product pages. Some pages list product

briefs in rows of five, while other pages list products in rows of three, and often begin with a large image

which initially hides products beneath the taskbar until a user scrolls down (Figure A3).


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Another issue is the placement of items listed as out of stock online (Figure A4). The first two

rows of retail space on a given product page constitute the first offerings viewed by a customer when

they arrive. If many of the item briefs in these rows are out of stock online, it forces the customer to

work harder to find items they can buy and may create an association between Target and perceived

inventory problems.

For the next piece, Target would do well to take a page from Walmart.com, literally. Where Wal-

Marts website automatically defaults a user to their closest (or preferred) store location for in-store

availability quotes, Target requires users to re-enter geographic information every time they click a

product to find out about that products availability (Figure A5). Again, this requires additional clicks that

serve only to frustrate customers. Target.com is also weak in its communication of available channels of

purchase, including in-store, ship-to-store, or ship-to-home (Figure A6).

The second portion of the functionality issue is in regards to the actual coding of Targets

website. According to the W3C markup validation tool (W3C), the Target.com homepage is riddled with

almost 2000 errors and warnings (Figure A1). While the site does not exhibit any glaring issues with its

functionality, the potential for problems, now and in reference to future browser updates, is apparent.

These would likely come in the form of minor incompatibilities that could affect the usability of a given

link or a given page, causing a user to experience problems when attempting to navigate the site (Heng).

Additionally, without validation, a sites search-ability may be hampered, due to the constraints certain

markup inconsistencies often place on web crawlers (Technoworth).

ONLINE RETAIL STRATEGY

Target needs to start by considering the desired outcomes (Chatterjee) of its website from a

customer perspective. The primary advantages of shopping online to be gained by users come in the

form of speed and convenience. That means reducing the number of clicks required to find a desired

product and make a purchase. While Targets site is arguably one of the most graphically advanced and


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visually appealing in the world of online retail, it appears as though the company has lost site of the

fundamental purpose of such a site for the customer. While the atmosphere Target has created is a

valuable asset, it is not structured to optimize speed and convenience for the user.

Because online retail is ever becoming a more prevalent channel for consumer shopping, it is

swiftly becoming less a source of differentiation for large retail firms, and more a business singularity

that Target needs to improve in order to simply compete effectively.

Target also needs to view its online approach as an iterative loop (Sull), constantly taking into

consideration the changes in markup languages, technological advances that may allow for increased

speed, and the overall customer-centric approach to, and understanding of, website navigation.

RECOMMENDATIONS

Target first needs to re-design the header containing its websites root menu (Figure A2). The

first two tabs women and men should be completely eliminated, and replaced by tabs for

apparel, accessories, and shoes. The kids tab should also be eliminated, its contents relegated to their

appropriate product-type categories. Finally, the babies tab should be maintained; however, those

products that fit with existing and recommended product-type categories should be duplicated within

the submenus for those sections. This way, a user can find what theyre looking for through either

channel they may gravitate to.

The product pages then need to be re-formatted to fit a single, consistent mold. It is

recommended that Target use the five-products-per-row format from its laptop product page (Figure

A3) in order to maximize the product briefs per row. Bulky images should be removed from the top of

product pages such as the womens jeans product page (Figure A3), as it exists currently.

Out of stock online should be changed to temporarily unavailable (FigureA4). This better

reflects the reality of the tagline, which is to say that the product is out of stock online and at all


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locations, but will be back soon. Additionally, temporarily unavailable products should be listed at the

bottom of the page to free up the prime retail space in the first several rows of product briefs.

Target should also employ a default location function on its item detail page (FigureA5). This

way, customers can automatically view the availability of a given product at the store they are most

likely to retrieve it from, should they choose the in-store option. It is important to note that this does

not mean that Target should remove the option to choose a different store location. It should simply

become an optional feature as opposed to a required step in the purchase process.

Another change to the sites user interface is in regards to the sites communication of available

channels of purchase on the item brief page (Figure A6). For those items that require some combination

of features, say color and size, the final drop-down box should show availability for each potential

combination based on the prior feature(s) selected. For example, if a user chooses red jeans, the drop-

down box for size should then display either in-store & online, in-store only, online only,

temporarily unavailable, or unavailable next to each size offering. The word temporarily should be

used to distinguish between feature combinations that are out of stock, and those that are not offered.

All told, these recommendations will have a marked effect on the sites usability. Speed, clicks-

per-visit, and overall navigability will be greatly increased, leading to a substantially higher quality

customer experience. These benefits, in turn, will result in a higher sales-per-unique-viewer for

Target.com.

To implement these changes, a team of programmers and web designers should be assembled

and tasked with a minor re-design based on the aforementioned recommendations. Fortunately,

because the site would largely remain unchanged, this is a relatively simple and low-risk task. The time

to develop and implement this solution is estimated at approximately four business weeks. The

likelihood of removing the site for any substantial amount of time for maintenance is slim. It is


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important that any adjustments be made during times of historically low site traffic. The total cost of the

minor re-design is estimated at $10,480 for labor (Figure B3).

Finally, Target should seek to eliminate all unnecessary validation errors to ensure an optimal

user experience through a decrease in the potential for site errors. This means reading through each

pages source code and fixing areas lf incompliance with W3C standards. This is critical in order to

ensure against current and future errors that could affect the sites usability.

In order to achieve this, a team of programmers should be assembled to read through all of the sites

estimated 46,912,000 lines of code (8,000 lines per page multiplied by the 5,864 total pages resulting

from the Auditmypc.com XML-Sitemap) and enforce W3C validity. Implementation is estimated to take

28 weeks at 160 man-hours per week (Figure B4). The cost is estimated at $133,200.76 (Figure B5).

METRICS

First, Target should monitor its online sales growth and pit this figure against

competitors such as those previously mentioned. As users begin to realize how much easier and

more fluid the sites navigation is, Target should see an increase in the growth of sales;

however, this metric is not enough by itself.

The next, and arguably most important metric Target should monitor, is Target.coms

sales per unique viewer. This figure is a key indicator of a customers willingness to spend

money at Target.com, after they have accessed the site. By comparing this figure with historical

sales per unique viewer, and the same figure for its competitors, Target can better understand

how users are spending money in the online retail market. Additionally, in assessing the success

of website usability- and functionality-related recommendations, sales per unique viewer is an

excellent indicator. In fact, even if Target is only able to increase the sales per unique viewer by a


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single dollar as a result of the preceding recommendations, it will pay for the costs of implementing the

above recommendations approximately 188 times over.


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WORKS CITED

1. 24/7 Wall St. Dollar & Clearance Stores Set For More Growth (BIG, NDN, TUES, DG, DLTR, WMT,TGT, XRT) http://247wallst.com/2011/08/25/dollar-clearance-stores-set-for-more-growth-big-ndn-

tues-dg-dltr-wmt-tgt-xrt/. August 25, 2011.

2. Anderson, George. Is Target on the Right Path? Retail Wire.http://www.retailwire.com/discussion/1530 6/is-target-on-the-right-path. June 9, 2011.

3. Arbesman, Debra Miller. Target vs. Wal-Mart: Online Conversion Battle Heats Up Compete.com.http://blog.compete.com/2009/06/16/target-walmart-online-shop-conversion/. June 16, 2009.\

4. Ashworth, Will. Signs of Weakness at Bed Bath & Beyond InvestorPlace.http://www.investorplace.com/2011/09/bed-bath-beyond-bbby-stocks-to-sell/. September 15,

2011.

5. Associated Press. Profit Is Up at Penneys, but Shares Fall The New YorkTimes.http://www.nytimes.com/2011/02/26/business/economy/26shop.html. February 25, 2011.

6. Boyle, Matthew. Wal-Mart Stores Losing Top Two Executives at Online Division Bloomberg.http://www.bloomberg.com/news/2011-09-27/wal-mart-losing-top-two-online-executives.html#.

September 27, 2011.

7. Chatterjee, S. Delivering Desired Outcomes Efficiently: The Creative Key to Competitive Strategy.California Management Review. 1998.

8. Enright, Allison. Target re-designs its e-commerce site Internet Retailer.com.http://www.internetretailer.com/2011/08/23/target-redesigns-its-e-commerce-site.

A

ugust 23,2011.

9. Google Ad Planner. The 1000 most-visited sites on the web Google.http://www.google.com/adplanner/static/top1000/#. 2011.

10.Heng, Christopher. HTML and CSS Validation: Should You Validate Your Webpage? The SiteWizard. http://www.thesitewizard.com/webdesign/htmlvalidation.shtml. 2004.

11.Miller, Debra. Compete Blog: Target vs. Wal-Mart - Online Conversion Battle Heats Up Retail Wire.http://www.retailwire.com/discussion/13827/compete-blog-target-vs-wal-mart-online-conversion-

battle-heats-up. June 24, 2009.

12.Mirabella, Lorraine. Kohls, Wegmans to hire 1,800 in Hartford County The Baltimore Sun.http://articles.baltimoresun.com/2011-03-29/business/bs-bz-harford-retail-20110329_1_wegmans-

stores-hunt-valley-wegmans-wegmans-food-markets

13.SEO Consultants. Website Validation Challenge.http://www.seoconsultants.com/validation/challenge/. 2009.


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14.Simply Hired. Average Programmer Salaries http://www.simplyhired.com/a/salary/search/q-programmer. 2011.

15.Simply Hired. Average Web Designer Salaries http://www.simplyhired.com/a/salary/search/q-web+designer. 2011

16.Stratecomm. A Web Team Focused on YOUR Online Success http://www.stratecomm.com/team/.2011.

17.Sull, Donald. Closing the Gap Between Strategy and Execution MITSloan Management Review.2007.

18.Technoworth. W3C Validation http://www.technoworth.net/services/seo/w3c. 2011.19.W3C. Markup Validation Service http://validator.w3.org/. 2010.20.Wahba, Phil. Exclusive: Macy's beefs up websites to draw foreign shoppers Reuters.

http://www.reuters.com/article/2011/06/24/us-macys-idUSTRE75N5LA20110624. June 24,2011.

21.XML-Sitemap. AuditmyPC.com. http://www.auditmypc.com/xml-sitemap.asp.22.Yahoo Finance, BBBY. http://finance.yahoo.com/q/is?s=BBBY+Income+Statement&annual. 2011.23.Yahoo Finance, KSS. http://finance.yahoo.com/q/is?s=KSS+Income+Statement&annual. 2011.24.Yahoo Finance, JCP. http://finance.yahoo.com/q/is?s=JCP+Income+Statement&annual. 2011.25.Yahoo Finance, M. http://finance.yahoo.com/q/is?s=M+Income+Statement&annual. 2011.26.Yahoo Finance, TGT. http://finance.yahoo.com/q/is?s=TGT+Income+Statement&annual. 2011.27.Yahoo Finance, WMT. http://finance.yahoo.com/q/is?s=WMT+Income+Statement&annual. 2011.28.Zimmerman, Ann. More Target Than Tar-zhay? The Wall Street Journal.

http://online.wsj.com/article/SB10001424052702304906004576371641352415936.html. June 8,

2011.


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Appendix

Figure A1, Validation Errors. 10

Figure A2, Header & Root Menu. 11

Figure A3, Product Pages.. 12

Figure A4, Out of Stock Product Briefs. 13

Figure A5, Location Selector 14

Figure A6, Combination Selector. 15

Figure B1, Online Sales & Sales Growth. 16

Figure B2, Sales Per Unique Viewer.. 17

Figure B3, Cost of Minor Re-design 18

Figure B4, Cost of Validation.. 29

Figure B5, Time to Implement Validation. 20


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Relevant Figures, Section A

Figure A1.

The above is the result of the W3.org web validation tool (W3C). Errors are regarded as pieces of code

that are not formatted according to W3 web validation standards. Warnings are regarded as pieces of

code that have minor syntactical issues. Each of these may or may not be problematic at some point inthe future. It is important to keep in mind that web standards, and more importantly browser standards

are constantly changing and evolving. While it is true that many of these errors are likely due to the

nature of the website Target.com is not a static design it is highly probable that much of what is

returned by the web validation tool could and should be changed.

As web browsers evolve and standards change, it is important that a website maintain appropriate

standards practices to ensure that all users have a pleasant, error-free experience when shopping

online.

To better illustrate the point, the above is the result of running the same validation tool for the Apple

retail website. Minimal errors and a single warning ensure a high likelihood of desirable user interaction

with the companys online store.


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Figure A2.

The above figure was cropped from a screenshot of the Target.com homepage. This is the root menu

header and it displays continuously as a user navigates the site. The first four links in the root menu

women, men, baby, and kids, categorize products by their targeted consumer. Conversely, the

following root menu links categorize products by product type.

To make matters worse, some products that belong to a given product type, such as furniture cannot

actually be found in the sub-menu with other like products (i.e. certain furniture products cannot be

found within the furniture tab). Instead, products such as furniture for kids and babies can only be

found within the baby or kids tabs. It is easy to see where this could cause user frustration and even

lead potential customers to the assumption that certain products are not sold by Target, when in fact

they are.


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Figure A3.

In the first screenshot, laptops are shown immediately upon arrival at the laptop product page. In the

second screenshot, however, a large image displays, forcing a user to scroll down before being able to

see products. These large images often take several seconds to load, forcing a user to wait before

accessing the desired product list.

Additionally, certain product pages such as the one for womens jeans list products in groupings of three

instead of five, increasing the average number of clicks to view a full product line. This also creates an

unnecessary inconsistency with the five-products-per-row approach found on other product pages.


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Figure A4.

The above figure is taken from the Nintendo DS link from the Video Games sub-menu. The

screenshot shows the first row of products viewable on the Nintendo DS page. Instead of utilizing

valuable retail space for products that Target may actually make a sale on, the site often fills its most

prime retail space with items which are currently not available. These are termed out of stock online.

Another problem in this area is the fact that out of stock online actually means out of stock. Not

only are these items unavailable online, they are also unavailable in store. This could easily create

confusion for users trying to purchase a product marked out of stock online through a branch location.


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Figure A5.

This figure is the small pop-up window that appears every time a user attempts to find an item at a

store. This is a necessary component of the firms website; however, this is the only way Target.com

conveys in-store availability to its users. This means that, even if a user has entered their geographical

information once during their online session, they will have to do so repeatedly for every item they may

wish to find in-store.


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Figure A6.

On the detail page for any single product, the site fails to show users a list of combinations such as

color, size, print, etc. alongside their available channels. This means that for any combination a user

may be interested in, the site has to completely re-evaluate that combinations availability. Even if an

item appears to be available from its product brief on a respective product page, some number ofcombinations will not be, which is understandable; however, by not immediately allowing the user

access to this information once the product detail page is displayed, Target.com risks luring customers

into a false sense of confidence in a products availability.

Here, instead of listing out in-store, online only, or out of stock, next to each size for a given color,

the page forces a user to create unique combinations before displaying availability. By allowing a user to

see such availability for all sizes in a given color up-front, Target could make a users shopping

experience quicker and more pleasant.


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Financial & Implementation Figures, Section B

Figure B1.

All monetary figures reported in millions

Firm, 2010 Total Revenue Est. Online Sales % of Total Online Sales Growth

Target $65,35726 $1,3308 2.0% 10.0%

Wal-Mart $408,08527 $6,0006 1.5% *22.0%b

Amazon $34,2006 $34,2006 100.0% 40.0%

Kohl's $17,17823 $1,00012 5.8% 50.0%

Macy's $23,48925 $1,52720 6.5% 28.7%

JCPenney $17,55624 $4955 2.8% 26.8%

Bed Bath & Beyond $7,82822 $894 1.1% 3.0%

* The actual reported figure is a range of 17-22%. The upper-end figure of 22% was chosen for the

purposes of the figure.

Based on the revenue figures for Wal-Mart and Target from 2010 and estimates for each firms online

sales, the above figure shows the percent of total online sales as a portion of total revenue. While

Targets relative position appears impressive, the level of online sales growth and certain additional

metrics tell a different story.


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Figure B2.

Unique viewers and Estimated Online Sales reported in thousands

Firm, 2010 Total Unique Viewers Est. Online Sales Sales Per Unique Viewer

Target 27,20011 $1,330,0008 $48.90Wal-Mart 32,10011 $6,000,0006 $186.92

Amazon 110,0009 $34,200,0006 $310.91

Kohl's 9,9009 $1,000,00012 $101.01

Macy's 13,0009 $1,527,00020 $117.46

JCPenney 13,0009 $495,000.005 $38.08

Bed Bath & Beyond 6,7009 $89,000.004 $13.28

As is evidenced in the above figure, only JCPenney and Bed Bath & Beyond show lower figures in terms

of sales per unique viewer. In particular, the fact that Wal-Marts sales-per-unique-viewer figure is

almost four times greater than Targets is a cause for concern. Because both retailers carry such a similar

array of products increasingly, as Target maneuvers its way into the grocery business (Anderson) this

comparison sheds light on some of Target.coms weaknesses as a retail website.


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Figure B3.

Cost of a 4-week Minor Re-design

Web Designer16, avg. hourly wage $29.5015

Programmer16, avg. hourly wage $36.0014

Total hourly wage $65.50Hours per day 8

Total wage per day $524.00

Days for re-design 20

Total cost of re-design $10,480.00

This is an overview of the cost to employ a single web designer and a single programmer, working full-

time for four weeks. Because all of the usability issues Target.com faces are imbedded in cross-page

functions like the item detail window that displays for all items when clicked and the page header that

displays on all product pages, these largely simple fixes should require only a few days to successfully

implement.

In this scenario, three days are allotted to make adjustments to the existing site layout for each of the

five usability issues, and an additional five days are allotted for any unforeseen issues arising from the

minor re-design.


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Figure B4.

Cost of Validation

Web Designer16, avg. hourly wage $29.5015

Labor hours per page 0.7713

Total wage per page $22.72Total number of pages 586421

Total cost of validation $133,200.76

The above details the cost of validating all of Target.coms 5,864 pages (XML-Sitemap) to meet W3C

markup validation standards (W3C).

One estimate cites the time to validate a page with 2,309 errors and 1,356 warnings as being about 1.5

hours (SEO Consultants).Assuming a similar number of errors for each of Targets pages to the 811

errors and 1,078 warnings yielded by W3C for the firms homepage (FigureA1), this yields a total labor-

hours-per-page, based on the sum total of errors and warnings, of .77 hours per page.


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Figure B5.

Time to Implement Validation

Hours per page 0.7713

Total number of pages 586421

Total number of hours 4515.28Hours in a full-time work week 40

Total number of weeks 112.882

Programmers on the team 4

Total weeks for the project 28.2205

Total man-hours for validation, the product of the total number of pages and the labor hours per page,

is estimated at 4,516 hours. This translates into approximately 28 weeks for a team of 4 programmers.

final analysis v5

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