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On Target?

January 24, 2012

Ann Zimmerman of The Wall Street Journal wrote a fascinating article earlier this week on Target’s efforts to help thwart “Showrooming” when shoppers come into the store to see a product in person only to buy it from a rival later on-line, frequently at a lower price.

According to the article “Last week, in an urgent letter to vendors, the Minneapolis-based chain suggested that suppliers create special products that would set it apart from competitors and shield it from the price comparisons that have become so easy for shoppers to perform on their computers and smartphones”.

Hmmm.. As a product developer, I find some special significance and perhaps just a twinge of schadenfreude here – not specifically at Target but over my perception that the big-box retailers were a key enabler and driver of the rush to undifferentiated, unimaginative products in the retail segment. We consumers were certainly to blame but the increased clout of big-box retailers and their relentless squeeze on margins and unwillingness to take risk or allocate space for niche products contributed to this reality.

When “true innovation” is defined as having 32 speeds on my blender instead of 24 I think I can predict where this is headed.

Manufacturers often responded by slashing internal innovation and turning into glorified branding/sourcing firms where generic, undifferentiated products from offshore manufacturers were rebadged, reskinned, repackaged and cost reduced to the point of total homogeneity and mediocrity. When “true innovation” is defined as having 32 speeds on my blender instead of 24 I think I can predict where this is headed. Ironically, of all the big-box retailers, it is Target that arguably puts the biggest premium on innovation and design. Never the less, the squeeze is evident, widespread and apparently painful.

Of course nothing illegal, immoral or even deplorable here – just the natural churn of a business cycle. The big-box retailers did a great job of steering us to what we want in a way that left them uniquely positioned to provide it. And now technology has turned that cycle again but this time the big-box retailer are the ones being left in the lurch.

I don’t know for sure but I’m guessing the future doesn’t bode well for Target’s strategy here. Smart phones and tablets are the latest extension to the limitless pool of internet knowledge and frictionless commerce, giving us unprecedented and seamless access to both information and channels of distribution. That particular genie is out of that particular bottle. Asking suppliers to gen up “special products” to help Target differentiate themselves from Amazon might have them wondering “what have you done for me lately?.” Or at least “why”?

As a further irony, I might envision a future where brick-and-mortar retailers survive and indeed thrive by refocusing on a boutique approach to niche products and elevating the shopping “experience” – ironic because these were exactly the retail traits crushed by the big box revolution. If there’s any doubt how we think things are headed, a quick comparison of the stock prices of Amazon and Target is pretty telling. Might be time for a little innovation around the business model.