Sunday, January 25, 2009

Target: Why Not Just Lower Prices or Raise Wages?

From the Target Corporate Responsibility Report Overview 2007:

Since 1946, we have contributed 5% of our annual income to programs that serve our communities. Today, this long-standing tradition means that more than $3 million every week goes to education initiatives that inspire children to learn, make it possible for families to experience the arts and to partner with a variety of social service agencies, families and communities across the country.

You might have seen large signs in Target stores with that message, I think it has them in every store.


Q: Wouldn't it be a lot easier for Target to just lower its prices and/or increase wages for Target employees by $3 million weekly? Wouldn't that be a more direct, and just as effective, way to serve the communities where Target stores are located?


14 Comments:

At 1/25/2009 10:49 PM, Anonymous Ian Random said...

I always thought it was funny that Walmart offers benefits to more of their workers than the red circle. Yet, Walmart is harassed endlessly and the red circle isn't. I wonder if that 5% tithe to charities keeps away the lefty organizations. Kind of like Ted Turner who can get away with hunting on his ranch as long as the donations keep flowing.

 
At 1/25/2009 11:15 PM, Blogger like such as said...

lol tithe. It's so true.

as for Mark's question - would lower prices/higher wages be just as effective? Yes. Just as visible? No.

In that way, Target is being smart. Wal-Mart may do as much or more for the community by keeping prices low, but the community itself doesn't realize that fact. 'Yeah they might have low prices, but for what? So they can be rich and throw good people out of business? I'm going to shop at Target, cause at least they help the community.'

Target's "charity to the community" signs have more effect on customers than Wal-Mart's "everyday low prices" signs.

 
At 1/25/2009 11:32 PM, Anonymous Anonymous said...

Is Target really being smart? What happens when they lose business to WalMart and Target has to stop the giveaways in order to compete?

Here's an interesting opinion:

http://captaincapitalism.blogspot.com/2009/01/businesses-should-stick-to-business.html

 
At 1/25/2009 11:57 PM, Anonymous Mika said...

Isn't the answer because all the philanthropy tax deductible?

 
At 1/26/2009 12:19 AM, Anonymous Anonymous said...

Walmart ALSO gives to the community. The stores do show who they give to. The difference is that it's a much lower percentage of sales (maybe because Walmart has very little margin to begin with).

That said, it's a smart idea to publicize ways in which you are a good community citizen. That builds more good will among more elite citizens...

Walmart could always institute some sort of redcard that allows users to pick their favorite local nonprofit or school to give to.

 
At 1/26/2009 12:38 AM, Blogger like such as said...

That's true. In fact I think i remember a few posts on this very blog that say that Wal-Mart deserves the Nobel Peace Prize, not only for their charitable work, but even for the real world benefits that their low prices bring to the lower classes.

My only point is that the real world benefits that Wal-Mart brings are less visible than the charity given by Target and others. Plus the perception that Wal-Mart destroys communities is too strong to be shaken by any charitable donations that it gives.

 
At 1/26/2009 1:56 AM, Blogger gadfly said...

Mika ...generally, all expenses are tax deductible includings wages and charity.

My answer to Mark comes from working for big companies for 45 years . . . executive suites and boardrooms are occupied by liberals who claim to put employee welfare first, but rarely do so. Personal greed gets in the way of effective management and underlings pay the price for ill-conceived business (ad)ventures.

As for who does a better job for employees and customers, Wally World or "the French company" . . .it is Walmart by a landslide.

 
At 1/26/2009 4:20 AM, Anonymous Anonymous said...

Don't forget about all the jobs that are required to administer and advertise Target's benevolence

 
At 1/26/2009 4:47 AM, Blogger OBloodyHell said...

> I wonder if that 5% tithe to charities keeps away the lefty organizations.

It also probably qualifies as-is as
1) a charitable tax write-off, thus defacto costing less than the amount given. If it were handed out via wages, that would not be the case.

2) It's "We're good people" advertising. Just as Ronald McDonald House makes McDonalds' look like "responsible members of the community", so, too, does Target's similar works in this regard. I've never really thought too much good of Ronald McDonald House. Charities which advertise the "goodness" of an organization seem to me as though they're violating the precept in Matthew 5,6,7 about not making it obvious that you're fasting when you are, etc. -- by advertising what you do, you negate the "payment" aspect of giving: There's a notable difference between giving up something which costs you nothing, and giving up something which costs you something. The boon to the recipient doesn't change, but the underlying motivation and altruism from the donor are very different.

 
At 1/26/2009 8:31 AM, Blogger David said...

1)Would you have also argued that Andrew Carnegie should have skipped the library-building and just given his steelworkers a big raise?

2)Pretty clearly, TGT has a conscious strategy to appeal to the kind of people who would normally feel a sense of status loss from going into a discount store. The charitable contributions are probably motivated at least in part by that strategy.

 
At 1/26/2009 11:42 AM, Blogger misterjosh said...

1) it's all about marketing
2) higher prices serve a purpose - they keep the "undesirables" out

 
At 1/26/2009 12:01 PM, Blogger verloren said...

misterjosh makes a good point - wouldn't it do more good for Target (or Wal-Mart) to stop advertising, and use the money saved to cut prices? And wouldn't it be better to stop selling all those different colored shirts, and just sell blue ones at a lower price?

Target's charitable efforts are a part of their marketing (in the broadest sense) effort that also does a bit of good. I'm sure it could be used more effectively than it is to benefit the community, but its prime role is to benefit Target, and that it does quite ably.

 
At 1/26/2009 2:35 PM, Blogger like such as said...

"Charities which advertise the "goodness" of an organization seem to me as though they're violating the precept in Matthew 5,6,7 about not making it obvious that you're fasting when you are, etc. -- by advertising what you do, you negate the "payment" aspect of giving."

I think this applies when "entering the kingdom of heaven" is the goal, but I'd Target is in this for the respect (money) of men, not God.

I don't think, either, that Target's self-publicity negates the benefits of its charitable work, and I've always been of the opinion that, when it comes to giving to charity, the motivation behind the giving is irrelevant.

 
At 4/18/2009 3:26 PM, Anonymous Anonymous said...

Well You want to know why Target doesn't lose business because their quality is better than Wal-Marts I am young and even i see that. People would much rather shop at a Target than a Wal-Mart and people won't notice when Target's prices are oh what 49 cents higher than Wal-Mart's. Because if you really look at that you obviously have way to much time on your hands, plus your stupid because we all know Target quality is better.

 

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