Before the recession, Target was the cheap, chic, cool kid of discount retail. But now, retail analysts are wondering whether Target can bounce back with the economy. Shares of the Minneapolis-based company's stock fell to their lowest point in a year this week — down more than 25 percent — and the retailer saw just a 2 percent increase in same-store sales for the first quarter. What went wrong? Here, four theories:
1. The brand has become muddled
Target lost its cachet by emphasizing low prices on food and other basic goods during the recession, says Goldman Sachs retail analyst Adrianne Shapira, as quoted by The Wall Street Journal. That might have been a smart move at the time, but it's driven away the higher-end shoppers who buy the cool stuff. "It is as if [Target has] fallen off people's shopping list for discretionary products."
2. Formerly uncool competitors caught up
"Some of Target's struggles may also owe to the changing competitive landscape," says Ann Zimmerman in The Wall Street Journal. In its coolest days, the company was a cheaper-chic innovator. Now, competitors like Kohl's and J.C. Penney have "taken a page from the Target playbook" and added their own affordable designer goods, partnering with big names like Vera Wang and Ralph Lauren.
3. Target made poor political decisions
Blame Target's support for a conservative anti-gay group, says Jenna Sauers at Jezebel. Last year the company gave $150,000 to a group that supported opponents of same-sex marriage, causing Lady Gaga to block her new album from being sold at Target. For years, "people who think themselves politically liberal" regarded Target as a "kinder, gentler, designer-y-er retail safe space," at least compared to Wal-Mart's "union-busting, Main-Street-killing, profiteering corporate hydra." Now Target's reputation with liberals is fading, and the truth is rearing its not-so-cool head.
4. It's the economy, stupid
"The problem here is that customers can't afford the pricey, trendy items that Target wants to be known for," says Kim Peterson at MSN Money. The economy is still flailing, and people just aren't spending a lot on discretionary items. But, that's not the only reason the company's stock price is down. With many Americans still struggling to make ends meet, Target and Wal-Mart are losing customers, and even investors, to even cheaper discount and dollar stores.
