Target has announced that they are introducing a new
in-store brand called Smartly. The line
will feature a variety of products in smaller sizes. Think single roll of toilet paper. And most items will sell for under
$2.00.
Their target for the line is cost-conscious Gen
Z/Millennials who are either college students or starting their first job. And they are opening smaller-format locations
near college campuses. (Forbes, 2018)
Dollar stores are booming so it makes sense for
Target to try to cash in. Interestingly
research shows that dollar store customers fall into two different age groups -
under 24, which are the Gen Z's and Millennials and 55 - 64, which are the Baby
Boomers. So their target selection makes
sense.
But, the thing about dollar stores is that they are a
rip-off because they charge more on a per unit basis. So while one roll of toilet paper does indeed
cost less than the usual package of four, if you do the math you are paying
more for that one roll than you would for each of the four. (Stone, 2017)
So, what's going on here? What have we
learned about consumer behavior that can explain going to the dollar store?
Do consumers realize that they are actually paying more? If so, why would they keep going? Do you think that Gen Z's/Millennials will
switch to Target? What about Boomers? Do you shop at the dollar store? Will you continue to do so? How about Target? Will you shop Smartly?
Forbes, T. (2018, October 8) Target Zeros In On Budget-Conscious
Millennials With Smartly. mediapost.com. Retrieved October 9, 2018, from https://www.mediapost.com/publications/article/326175/target-zeros-in-on-budget-conscious-millennials-wi.html
7 comments:
Every consumer has a specific interest for a specific product, If you fall into a low income class and you are a college student you probably will love Targets new Smartly brand. Consumers do not realize they are paying more because once they hear the price they swipe the card and they dont take into account their future purchases and only focus on the present deals. I am an avid Target buyer and i would definitely switch to Targets Smartly brand because I simply love deals. I dont shop at the dollar store and for that reason having a Target "dollar store' with Target brand items makes me feel much better.
It is interesting that the customers of dollar stores fall into the two different age groups – Gen Z’s who are under 24 and baby boomers who are 55-66. I believe the two groups have different reasons to go shopping in dollar stores or smartly.
The reason why Gen Z would like to go shopping in dollar store could be that they would like to try new products and spend less money on it. For example, if a college student wants to try a new brand of toilet paper, he would spend 2 dollars to buy one in a dollar store instead of a big package of toilet paper. He only spends 2 dollars to try a new product, thus he doesn’t have to worry about the risk of a failed purchase or attempt. The dollar store or Smartly encourage Gen Z to try new brands and give many small brands opportunities to reach the market.
The reason why baby boomers go to dollar store could be more involved with the discount reasons. The baby boomers have the habits of saving. They may believe doing purchases in the dollar could help them save some money. What’s more, some baby boomers hardly doing purchase online. Thus, they don’t know about the package price of a certain product or the convince of shopping online. Thus, they may rely more on dollar store.
Guo Yu
One group that the dollar Target is expecting to sell products to are the generation Z. This group more focused on savings as compared to millennial when they were their age, for this reason, they are attracted to purchases that maximize the value of every dollar. They may consider buying things in bulk as waste assuming that they may get spoiled and for this reason, they choose to buy the only item that they require at a specific moment and giving a blind eye to the price of a single item. Millennial, on the other hand, is interested in the entire experience of buying a product. For this reason, they may want to try out several products and since this is possible with the items which are in smaller quantities, for this reason, they may switch to target. Baby boomers as well prefer experience. They, therefore, prefer a sore where they can touch and see their preferred products. As they seek this experience of exploration, they would prefer a dollar store rather than shopping online. In—stores, therefore, works for this group.
As all the three categories seek to satisfy their unique needs, other factors like price per item may not matter and they will, therefore, frequent the stores. Once in a while, I visit the dollar store and I am likely going to visit Target, especially when I will not be having much to expend.
Yue Feng
This is very interesting to me as I am a person who always checks the "price per ounce" or "price per unit" item when making purchases. Maybe instead of a generational thing, this is more of a personality trait difference. I am an ISTJ who researches and doesn't make rash purchase decisions. Because of this I would be more likely to buy in bulk to save money even though it is more money up front. Others however who have more impulsive buying habits might be more likely to be the target of this new launch by Target.
Just like Amazon is huge because of it's lucrative prices, dollar stores work the same way. We are always looking for the best deal, or we like to feel like we got a good deal, which both Amazon and dollar stores provide us with. I think deep down we realize that we are paying more in the long run, but for me that has never bothered me. Let's say I'm buying toilet paper, even if the per unit price is less if I would buy in bulk - Somehow it feels better thinking you "spent less". Even though buying in bulk is cheaper in the long run, it's a bigger, one time expense that scare millennials away. I think Target has a chance at attracting both millennials and boomers. Trader Joes is another great example, they attract both millennials and boomers with their low prices and fresh and new approach to an already exciting industry. I will definitely give Smartly a chance.
Among some of the things that those who fall under Generation Z are known for are a multi-channel presence, a need for brick-and-mortar shopping experience (showrooming), responsive customer service, and social responsibility.
While this new business venture will provide Gen Z an opportunity to visit the stores to physically purchase their single unit goods, I worry that this may not appeal to their desire for businesses exhibiting social responsibility in their actions. For example, in this day in age, it is not at all difficult to do a little bit of research to discover that a pack of 4 is considerably cheaper than buying a single unit. I wonder if Gen Z-ers will feel that this pricing discrepancy is unfair and unjust over time. After all, the fair market price for goods is a way to exemplify social responsibility. Over time, they may feel that this pricing model is not a fair way to conduct business. Additionally, this would mean that the frequency of visits to the store would increase, which may be inconvenient for a generation that relies so heavily on instant gratification in the form of two or ONE-day delivery. They may find that the effort it takes to walk to the stores more frequently, should be justified in lower and "fairer" per-unit-cost.
From what we learned in class, this is a scarcity persuasion, by showing customers one dollar, people will think it's very cheap, so it's a very good way to target Gen Z and millenniums who have less income. I don't think people realize that they are paying more, although it's very clear that the product isn't as good as the normal price product. I think it really depends on where are people. Since, in New York people will less likely to switch to Target, because Target is far from the city. Boomers will more likely to switch, because they are more frugal. I seldom shop 1 dollar shop, because I don't think the goods are good. So, I will keep shop online which is more convenient. I will shop smartly after reading the blog.
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