The Slow Demise of the Ultimate Challenger Brand?

May 14, 2014 | blog | By Mike Sullivan

It was reported last week that Target CEO Gregg Steinhafel was forced out by an impatient board of directors who no longer believe in his long term plan and are using the security breach as a convenient excuse. Five years of flat to declining sales will not do and for the first time in the history of the company, Target may be looking outside the company for its next CEO. As a long time “fan” of the brand and one I have used many times as a positive teaching model in my classroom, I am really surprised that they find themselves here.

If ever a brand epitomized what makes challenger marketing so deadly successful when embraced whole-heartedly by an organization, it’s Target. For those of you too young to remember, there was a time in the mid 80’s when Target’s very existence was in doubt. Locked in a pricing cage match with Wal-Mart, Kmart and Sears, Target was losing ground fast and only a bold move could save it. At that time, CEO Bob Ulrich was the right guy for the job.

Unlike the much larger Kmart and Sears who opted to chase Wal-Mart down a pricing rabbit hole, Target thought like a challenger and strived to create an “upscale discount experience.”  While others in the mass merch category slashed branding budgets in favor of FSIs and deep discounts, Target created some of the most memorable television advertising in the 90s.

Among many ground-breaking concepts, Target bet very big and inked a deal with the hot designer Isaac Mizrahi to create a line of fashion-forward basics that no one in the industry thought would be successful. The idea that a designer who was the darling of Paris fashion was ok with selling a $10 tee shirt revolutionized the concept of low cost luxury.  Now this seems so common place but at the time it was radical and wildly successful. Spurring the rest of industry to start doing the same.

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The results of Ulrich’s strategies were stunning. It was an amazing 15 year run where sales and new store openings set records as did the stock price.  Sears and Kmart felt it most of all when a Wall Street Journal article ran a quote from a woman shopper at Target that perfectly encapsulated the Target mojo – ”When I go to Wal Mart I feel poor. When I go to Target I feel smart.”

But where is that mojo now? Competitor’s have caught up. $10 designer t shirts are everywhere and quite frankly Target has lost most of its cache with young women. It seems to be a classic case of a market leader falling victim to insular thinking and taking the path of least resistance.

Keep watching fellow challengers.

Carl Thompson is Chief Strategist at Dallas ad agency The Loomis Agency in Dallas.

Mike Sullivan

President at LOOMIS, the country’s leading challenger brand advertising agency


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