Target makes a last-minute decision and leaves Dollar Tree behind in the US

Amid fierce competition in the retail sector, some chains are seeking new strategies to avoid falling behind. The current situation doesn't favor those who stagnate, and every move can make a big difference. In this context, Target has decided to take the reins with a proposal that could redefine its position in the U.S. market.

Target has announced a series of decisions to stop a sustained decline in its sales, which has lasted for more than a year. Although the drop hasn't been drastic, it has caused enough concern for its CEO, Brian Cornell, to address it immediately in the latest first-quarter earnings conference. According to him, the company has faced "an exceptionally challenging environment," which has impacted both traffic and sales, especially in non-essential products.

Focus on value and low prices

Target has decided that going back to basics will be key to regaining ground. The company is betting on price as a differentiating factor, with more than 10,000 new items available starting this summer from just $1. This price offensive is focused on the Bullseye’s Playground area, where products are kept at $1, $3, and $5, now with the new addition of beauty items.

In addition, Target plans to adapt its promotions to each season. "In July, we'll focus on back-to-school and the college stage, positioning ourselves as a reference in value for families," Cornell explained. This approach aims to compete directly with chains like Dollar Tree, known for its low-price policy, which now feels threatened by Target's aggressive strategy.

It's not just about lowering prices. The CEO also emphasized the importance of offering "novelty, differentiation, and value" as essential pillars of the customer experience. In Cornell's words: "We want to guarantee consistency and reliability, without losing our essence as an innovative brand."

Internal changes and inventory improvement

The changes aren't limited to the shelves, Target has started an internal restructuring to react more quickly to a constantly changing market. A new Enterprise Acceleration Office has been created, led by the current COO (Chief Operating Officer), Michael Fiddelke, who will have greater responsibility within the company. "This initiative goes beyond improving efficiency; it seeks adaptability, innovation, and growth," Cornell stated.

Meanwhile, Fiddelke has set out to improve product availability and fight inventory loss. "We're making real progress in every aspect we measure regarding inventory availability," he commented. He also highlighted that they've achieved better-than-desired results in reducing shrinkage (losses), which positively impacts profitability, as revealed in The Street.

With these actions, Target is trying to set a clear distance from Dollar Tree, which continues to bet on a more limited model. Although both chains compete in the value segment, Target wants to offer a more complete experience in the United States.