Wednesday, April 22, 2015

Target's Pulitzer-losing strategy

The success of Target over the past two decades has been built by offering better quality merchandise at lower prices, creating a unique position (and loyal following) between traditional discounters and higher-end retailers. As with other discount retailers, Target has partnered with higher end brands, providing volume in exchange for their cachet.

The latest effort was Sunday, when Target offered an exclusive collection from Lilly Pulitzer, a line of colorful women’s clothing originally based in South Florida. My teen tells me this is the brand of sorority girls and other Southern Belles. The line is normally sold in expensive boutiques, and thus Target provided both convenient distribution and the promise of better prices.

However, the demand vastly exceeded Target's expectations. As with healthcare, the initial focus was on the crashing. However, as it turns out, the more systemic problem occurred in the retail stores.

At the two stores nearest to our home, the clothing sold out in the first hour, with cosmetics and accessories lasting about a day — a pattern repeated around the country. It was a one-time deal, with no restocking planned. Target later admitted that it expected that the sales (and traffic) would last weeks and not hours.

Instead, enterprising shoppers cleaned out the stores — one shopping cart at a time — to resell the products upon eBay. By our count, there are 38,000+ “Lilly Pulitzer for Target” products on eBay at 3x the original price. Lilly’s fans have vowed to boycott the online sales with their own hashtag (#LillyforeBay).

Avoiding this problem isn't rocket science. Our generation knows this as the Rolling Stones (or Springsteen) concert ticket problem — limit 2 per customer. The former newsmagazine Newsweek reports that H&M imposes limits on similar promotions.

Per Fortune, Target claims that only 1.5% of the merchandise is being resold, but I suspect that includes the less desirable accessories. The fashionistas denied even a single copy of the iconic Lilly Pulitzer shift dress — despite being there when the doors opened at 8 — would consider the problem more serious than Target wants us to believe.

The Pulitzer fiasco has certainly undercut Tarzhay’s image of chic fashion and operational efficiency. And apparently this happened four years ago when Target sold the Missoni designer brand. A brand is a shortcut for quality — including reliability and predictability – which is the opposite of what this weekend’s shoppers experienced.

If they were targeting boomer geezers it wouldn’t be a big deal, but irritating the pre-teens and teens that are its future customers is equivalent to pissing in the soup. It’s a perfect plan to send these young shoppers back to mall for H&M and other specialty realtors.

So — as in so many other aspects of business — here is another example where the execution is more important than the strategy.

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