Target is one of the largest retailers in the United States, which is why they are frequently used as an example when people attempt to explain SWOT analysis. It is easy to look online and find a Target Corporation SWOT analysis from 2018 or a Walmart SWOT analysis from 2018 or any previous year, which can help provide an easy example of the types of strengths, weaknesses, opportunities and threats a retailer may face in any current economic climate.
A SWOT is an analysis tool to help recognize how a company is doing right now and what external factors may harm or help them in the near future. While a SWOT analysis isn't the most in-depth form of analysis, it can be a quick and easy way to figure out what is helping and hurting a company at the present and what factors might affect it in the future. In the SWOT analysis, the strengths and weaknesses look at the current state of things, whereas the opportunities and threats look at external factors that might influence it in the future.
Obviously a brand's SWOT analysis will change over time, which is why you usually want to look at the most current possible SWOT analyses, which means looking at data from 2018 if you're looking in 2019. Target weaknesses from 2018 include things that were already affecting the corporation, including:
- A business model largely based on big box stores, whereas many customers prefer the convenience of shopping at neighborhood shops, particularly mom-and-pop stores that support the local economy.
- The company waited much longer than its competitors to create a strong online presence and it still falls behind Amazon and Walmart in online sales (although a strength would be that the store's web presence greatly improved over the past year).
- Target has not ventured into other retail areas where other big box retailers have had success, such as filling stations or financial services.
- Target has many of the same offerings as its competitors, resulting in high competition for each store to offer the lowest prices.
- Legal cases over the last few years have negatively influenced the brand's image.
- The 2013 data breach may have been a while ago, but many customers are still distrustful of the company's data protection capabilities and are particularly hesitant to open credit cards with the store.
Whereas the weaknesses look at how the company was currently performing at the close of the 2018 year, Target threats for that same period look at how potential trends and economic factors may negatively affect the company if it does not properly prepare. Some examples of threats faced by the company at that point in time include:
- Rising labor costs in the United States and Canada (where Target also has brick-and-mortar stores) are likely to cut into profits (a potential opportunity is that workers with more income may want to spend it at retailers like Target).
- Discount and dollar stores are increasing in popularity, creating competitors who almost always have lower costs than traditional big box stores.
- Online retailers with third-party sellers, such as Amazon and Walmart, offer massive product selections that are often paired with very low prices as well as the convenience of online shopping and home delivery.
- Online clothing stores like Stitch Fix, Amazon and MM.LaFleur are now offering customers the opportunity to try clothes on before choosing to return or purchase them, further chipping away at one of the handful of reasons people may prefer physical stores over online retailers – the chance to try clothes on before purchasing.
- Amazon continues to introduce brick-and-mortar stores, which may further lure shoppers away from Target's physical locations.
- Increasing raw material prices may drive up the costs to manufacture Target-brand products, which must stay cheaper than the national name brands in order to stay competitive.