SOUTH PORTLAND – Sara Knowles has watched from her office as crews have cleared land, blasted rock and erected a warehouselike building in a field.
To many, the 125,000-square-foot structure is simply another store in the congested shopping district surrounding the Maine Mall.
But not to Knowles. For her and a legion of other shoppers, the store marks the highly anticipated coming of Target.
The fast-growing chain, which will soon have 1,000 stores, has developed a cultlike following with fiercely loyal customers who affectionately call it “Tar-ZHAY” in a faux French pronunciation.
While many mass retailers have failed or faltered in recent years, Target has been building scores of new stores a year, expanding into groceries and growing at a faster clip than Wal-Mart by one measure. It has stores in every state in the continental United States except Maine and Vermont.
Along the way, the chain has cultivated an image that may well make it the first discount retailer to be considered hip.
That, retail experts say, is why Target creates a buzz when it enters new markets. Knowles hears the chatter among co-workers, friends and at the day care center where she drops her children each day.
For more than a year from an office building where she works as a human resources manager, Knowles has watched as the new Target has risen from the earth. It is scheduled to open Oct. 14.
“This morning we were excited because they were putting pavement down on their parking lot,” she said.
Richard Church, a retail analyst with Salomon Smith Barney, said even his hometown of Fairfield, Conn., experienced Target envy when an old department store shut down.
“Everybody was saying, ‘We hope Target comes,'” Church said. “And they were disappointed when Gap opened there instead.”
How do you explain Target’s allure – and success – in the cutthroat retailing world?
After all, mass merchandising hasn’t exactly thrived in recent years. Remember Montgomery Ward, F.W. Woolworth, Bradlees and Caldor, to name just a few? All went belly up.
Kmart actually has fewer stores than it did five years ago, and J.C. Penney lost more than $700 million last year.
But Target has grown – and fast. It has been adding 55 to 65 new stores a year, and plans soon to start building 80 to 90 new ones annually. It is getting into groceries with 37 SuperTarget megastores, which average 175,000 square feet and may also have banks, pharmacies and even Starbucks coffee shops in them.
Overall, the square footage of Target stores is projected to increase 10 percent this year, which is higher than Wal-Mart’s growth of 8 percent.
Target stores are so successful that its parent company last year changed its name from Dayton Hudson Corp. to Target Corp. The Minneapolis-based company also owns 64 Marshall Field and 266 Mervyn department stores.
Target’s success has been in establishing itself as a hybrid between a discount retailer and full-price department store, said Howard Davidowitz, chairman of Davidowitz & Associates Inc. retail consulting firm in New York.
That’s a smart place to be. Whereas Wal-Mart is unlikely to siphon customers from higher-end department stores, or vice versa, Target draws clientele from discounters and department stores alike, Davidowitz said.
“So it appeals to a huge percentage of Americans because it offers good prices, and at the same time offers exciting fashions,” he said.
Church said about half the merchandise sold at Targets is virtually or roughly the same as Wal-Mart’s. It’s the other half where Target distinguishes itself with a focus on trendy designs and brand identity.
For instance, Target carries Michael Graves appliances and Waverly linens, Calphalon kitchenware and a line of trendy Mossimo apparel. Think you’re going to find Eddie Bauer camping gear at other discount retailers?
That’s part of the draw for people like Knowles.
“Their clothes are more stylish,” she said.
Target differs in other ways as well.
Analysts say its stores have brighter colors, wider aisles, softer lighting and more sophisticated signage than your typical discounter.
And Target’s customers – or “guests” as the company calls them – are more affluent, with a median household income of $49,000. By comparison, Wal-Mart shoppers’ household incomes are about $33,000, and Kmart’s are $30,000, Church said.
Of course, not everybody wants designer teakettles or chic martini glasses or Carter’s Baby Tyke clothing.
Otherwise, Wal-Mart wouldn’t have nearly 2,700 stores in 50 states, another 1,100 in Europe, South America and Asia, and annual revenues that are closing in on $200 billion a year. Wal-Mart is the world’s second-largest company by revenue and the most successful retailer in history.
Target, in comparison, won’t crack the 1,000-store mark until later this year, and its revenues last year were $29.3 billion. There are no Target stores outside of the United States.
Still, Target’s presence is clearly felt by Wal-Mart and other retailers in markets where they go head to head. The new Target here will be just a couple of miles from a Wal-Mart and less than a mile from J.C. Penney, Sears, Macy’s and Filene’s stores at the Maine Mall.
The real testament to Target’s strength, however, isn’t the impact it has on Wal-Mart or department stores, Davidowitz said.
Rather, it is how it has thrived in the face of Wal-Mart while scores of other retailers have gone out of business, he said. And it has done so by differentiating itself from the other discounters.
That’s evident in its marketing.
For example, Target’s ads try to make waffle irons sexy, basic clothing somehow exciting, and thriftiness cool. And for brand identity, they drive home the company’s bright-red bull’s-eye logo – over and over and over.
Compare those with Wal-Mart’s down-home ads that emphasize price and grandfatherly figures at the front door.
“Hundreds of discounters have gone broke. They couldn’t out-Wal-Mart Wal-Mart,” Davidowitz said.