Thursday, January 07, 2010

Appealing to Consumer Greed: Target vs. Costco

WALLETPOP -- The aisles of Target are rarely, if ever, criticized for their diminutive nature. But until recently, shoppers who prefer to buy in packages so large that they can't help but save money had to wander the even bigger aisles of warehouse stores like Costco and Sam's Club. Not anymore. For the next seven weeks, Target will offer big bulk items like extremely large packages of paper towels in its seasonal aisles (typically used for post-holiday merchandise markdowns in January and February). Target is calling it the Great Save Event, which will go through February 21 at all of the company's 1,740 stores.

According to retail analyst Mike Duff, the move makes perfect sense, and is consistent with Target's "Expect More. Pay Less" strategy: "It all adds up to an attempt to create more reasons for consumers to visit the store more often, which is important at a time when shoppers remain reluctant to spend on things other than necessities unless they believe they're getting significant bargains," he says.

It will also be great for Target's bottom line. The sort of savvy [MP: greedy and ruthless?] shopper who has been shopping at Costco will be easily convinced to switch those dollars to Target; especially given the chain's reputation for its trendy fashion offerings.

MP: We hear a lot more about how corporations are disloyal to their communities and employees and about "
corporate greed" (553,000 Google hits) than we hear about "consumer greed" (19,700 hits), but consumers can be pretty disloyal, ruthless and cost-conscious themselves, as this story demonstrates. In fact, there's a marketing aphorism that sums it up pretty well: "There's no brand loyalty that the offer of a "penny off" can't overcome it."

HT: James Vanke


At 1/07/2010 11:09 AM, Blogger Unknown said...

Loyalty in business is simply the lack of something better.

At 1/07/2010 11:37 AM, Blogger Cabodog said...

Costco's an easy target these days, as they've been steadily increasing prices on essentials to make up for the reduced sales on non-essentials with higher profit margins, like televisions, etc..

Costco's prices have increased to the point where we're seriously reconsidering our $100/year membership fee -- does it really pay for itself anymore?

At 1/07/2010 12:02 PM, Blogger Buce said...

Re "loyalty" over "greed"--it may not go by that name, but isn't this exactly what proponents have in mind when they push "buy American" or "don't eat French fries" campaigns--? Set aside whether they are a good idea--I suspect that on the whole, they are more successful than campaigns to promote corporate loyalty.

At 1/07/2010 12:28 PM, Anonymous gettingrational said...

Stores can be loyal to their customers through Return Policies. Costco has the customer's back and Target has the customer's money.

Target's Return Policy

Costco's Return Policy

At 1/07/2010 1:05 PM, Anonymous gettingrational said...

The Return Policy for Target above was for the employees's store which is a tough one. The Return Policy for customers is somewhat better but not even close to Costco's. Here is the correct link:

Target's Customer Return Policy

At 1/07/2010 11:39 PM, Anonymous Commo said...

I've never known a Big Box retailer to argue much about returns with the sole exceptions of software and restocking fees on some electronics. During a blizzard, Walmart refused returns on generators which is understandable.

I've returned things to nearly every big name store, months later, without a receipt, with no arguments. Some would only refund the lowest sale price in the past six months. Some would only give store credits. I considered all their policies generous.

Small stores are the biggest jerks about returns, credit card payments, coupons, warranties, etc.

At 1/08/2010 9:20 AM, Blogger bob wright said...

I don't understand why people insist on buying items on sale.

You'd think consumers would want to pay high prices in order to support "good paying jobs" and "jobs with a living wage."


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