target corporate social responsibility

Target Trends – External Environment Target is subject to a number of different trends that affect its business. These include external factors in the economic, technological, political and social environments. The economic environment has the most direct impact on a company like Target that sells a broad range of consumer staples to a broad audience across the entire country.

During the last major recession, Target struggled with sales that tracked GDP, flatlined margins and slugglish profit trends, all the result of consumers reeling in their spending during a time of substantial economic uncertainty (Marketwatch, 2010). For many consumers, Target is seen as slightly higher on the discount hierarchy, so when there is a recession, they trade down to Wal-Mart, dollar stores and warehouse stores to save even more money on staples (Marketwatch, 2010).

The political environment is less a factor in Target’s business, until of course it affects the economy. There have been increasing warning signs of a pending recession, in many cases due to political policies that are hurting the economy. Target in particular is feeling stress from an increase in tariffs and other trade barriers, especially where China is concerned, as that country is a major supplier for Target.

Target was among the companies that have publicly – and in their lobbying efforts – been at the forefront of a fight with the Trump administration over policies that have directly led to tariffs with China (Kopecki, Reagan, Soisson, 2018). The social environment is less likely to affect sales, but there are a few interesting elements to this. One is that shifts in the social environment can be a double-edged sword for retailers.

A retailer needs to stay on top of trends, especially in clothing, and if Target successfully identifies trends ahead of time, it can accelerate sales growth. If it does not, then Target might find itself in a situation where its inventory turnover decreases and it has to sell unwanted goods at steep discounts just to get rid of them. Target's discusses this in its annual report. The technological environment is also a double-edged sword, providing significant opportunity if the company gets it right, but risk if it does not.

In the back end of a high-volume discount retailer, technology is king, allowing the company to reduce costs, maximize efficiency, and meet customer needs simultaneously. Investment in supply chain technology, to the tune of $7 billion, was a cornerstone of the company’s digitization efforts that began in 2015, including investment in fully autonomous warehouses and “order to shelf”, which is the next level of JIT systems (Bedetti, 2017).

All told, the ability of Target to identify social and technological trends, and respond quickly, is one of the critical success factors for it, and any other company in the industry. This places emphasis on Target’s leadership to build responsive systems that allow it to make quick pivots when these elements shift. Trends – Internal Environment Target has traditionally sought to play to its strengths, which include competencies in supply chain management, marketing, staffing and merchandising.

The company has effectively defined its brand, which has helped it to attract a regular customer base, and extend into new markets across the United States. The company has made social responsibility a part of its platform, with a particular focus on community and on its staff. These moves have made Target an employer of choice at the low end of the labor market, so most of its stores will have relatively friendly, competent staff.

Target has not faced many ethical issues in recent years, even as other companies, such as Wal-Mart have been targeted by activist groups. That said, warehouse competitors like Costco have even better reputations on that front. Target also has sustainability targets that it aims for, and has built into its strategy, but this is not an area of strength for the company.

Importing goods from China, especially goods that are relatively cheaply made, is not especially sustainable, so the measures that Target aims for regarding waste reduction mask the fact that its business model is inherently not genuinely sustainable. Waste reduction is a noble goal, and helps Target to be more efficient, but is sustainability within the constraints of encouraging consumer culture and mass fossil fuel usage. Trends – Social Responsibility In response to the social trend towards responsibility, Target publishes a Corporate Responsibility Report.

As with all CSR initiatives, Target’s efforts are entirely voluntary, and the company defines its own success metrics and priorities within that context. The company focuses on the following major responsibility elements: internal staffing, customer service, community involvement, materials management, and stakeholder engagement. The report is highly detailed, outlining the company’s targets and its progress towards those targets. That said, Target’s CSR efforts are very much only a snippet of what the total responsibility possibilities are.

The upside is that Target has built social responsibility endeavors that it does pursue into its overall corporate strategy; the downside is that elements of CSR that don’t fit with the company’s strategy have been ignored. So, while not a poor performer, Target is not a great performer either, except maybe on the community and staff engagement aspects. Target should, however, be aware of what the trends are in this dimension, and start preparing to take a leadership role.

Other companies in its space have been targeted by activist groups, and that has taken some heat off of Target, but eventually its business model will come under fire, and this will be an interesting time for the company.

Target will want to have a strategy for weaning itself off of cheap Chinese goods, for starters, so in a way those tariffs that are the cause of so much grief in the retail industry might actually be a blessing for any company that has a long-range vision of dramatically reducing its carbon footprint. Ethics – Issues There are a number of ethical issues that could potentially affect Target.

Perhaps the most significant of these is with its staffing practices, as there have been some major shifts in recent years on that front. Diversity and inclusion are major social trends, and sexual harassment and equality are others. Target has a program for hiring for diversity, and ensuring inclusion. Creating an environment of inclusivity is a major strategic goal for Target, because it serves such a broad swath of the American population (Segarra, 2018).

Target gained publicity for its decision to install gender neutral bathrooms in all of its stores – including a boycott from some hate groups (Isidore, 2018).

Target has been subject to at least one sexual harassment case, against a single manager, but that track record is actually good for a company with as many employees as Target has, and the result is that the company has not faced much social backlash as a result of the incident – there does not appear to be any major systemic issues where sexual harassment is concerned. Target has built many ethical and social issues into its strategy, and supported them at the highest levels of the organization.

This has become a strength for the company, both as an attractive place to work and an attractive place to shop, and Target is now often viewed as a leader in inclusivity due to the public nature of its programs and its willingness not to cave to any pressure from outside groups on its policies.

In fact, at this point inclusivity is part of the Target brand identity, again reflecting a company that wants to sell to every American, and is willing to hire any American with the ability to do the job. In terms of strategic alignment, Target’s policies have a good logical alignment with its business interests. As a mass market retailer, Target needs two things – a lot of customers and a lot of staff.

Inclusivity is not just a matter of a social trend that the company is following, but is a matter of Target ensuring that its stores are a viable option for as many members of its target market as possible. Furthermore, Target’s positioning as a leader in this field, again, is not a matter of trend, but a matter of taking a strong ethical stance, one that happens to be aligned with the thinking of the majority of Americans.

But by taking a leadership position on social issues, Target is also setting a tone for other retailers, and other major companies, something that resonates with a large swath of its audience. In terms of regulatory issues, these are not necessarily a major factor for Target – the focus for the company is mostly on social issues. In part, this is because the regulatory environment for a large retailer is actually pretty loose, especially where things like minimum wage laws and right to work are concerned.

With limited impact of the regulatory environment, meeting regulatory standards is actually a fairly low bar for Target to jump over. Sustainability, as outlined above, is an area where Target seems to struggle a bit.

There is an argument to be made that a highly efficient operation like Target can actually deliver a higher standard of living to consumers for a relatively low environmental footprint, but there is a flip side to that argument that says its ability to do so is predicated inherently on fossil fuels, and therefore is not genuinely sustainable.

Sustainability is not just about efficiency, but also about reducing waste at the consumer level – not selling goods that break easily, are disposable, or are made with materials that are not sustainably sourced. That said, Target makes an effort in areas where it feels that it can have an impact on at least improving the potential sustainability of its operations. In its social responsibility report, it outlines the use of energy efficient buildings, initiatives surrounding renewable energy, and the work that is does.