Target's Great Save Borrows Warehouse Club Tactics

Last Updated Jan 4, 2010 8:00 AM EST

After expanding groceries to grab food sales that otherwise would go to supermarkets and rival Walmart (WMT), Target (TGT) has launched a winter promotion called The Great Save that features bulk items and "treasure hunt" deals in its stores' seasonal merchandise space, taking a page from the warehouse club playbook.

Other retailers have attempted to use bulk items to win sales â€" or at least not lose them â€" to warehouse clubs. Supermarkets have tried the approach for years, with limited success. Some gave up on bulk products, others developed limited sections featuring them. But bulk never really took off for other retailers the way it did for warehouse clubs. So Target's move to include The Great Save in the temporary context of a seasonal promotion can be taken as a low-risk method of gauging interest at a time when shoppers have been shifting purchasing. Some of that purchasing has been going to a warehouse club sector that has done well in the economic downturn.

Rather than the usual promotions in the space set aside for seasonal merchandise, Target is pairing bulk products such as toilet paper with special purchases including designer handbags. The promotion isn't limited just to low-price basics. For example, a Via Spiga Carlotta Shopper handbag is listed in a special section of the company's web site dedicated to The Great Save at $112.50, a reduction of half from the $225 list price according to Target.

Of course, the selection at warehouse clubs includes luxury items at discount prices.

This isn't the first time Target has used its seasonal sections to take a shot at another sector of retailing. For several years, it offered what it called Global Bazaar as an early year seasonal promotion, this using inexpensive home decor imports to win consumers who might otherwise shop for such items at Pier 1 (PIR) and Cost Plus World Markets (CPWM). Those retailers may appreciate that Target has taken some of the heat off them, at least for the moment.

So, the shift to The Great Save is consistent with past Target moves. Yet the promotion is innovative as the retailer has found a way to emphasize its low-price position â€" one CEO Gregg Steinhafel, in conference calls, said the company is determined to drive home to consumers - while providing more everyday products to its shoppers, as it has done with groceries in its pantry expansions and P-Fresh format roll out. Not only that, but it has managed to provide some low-cost luxuries, which links the promotion to Target's traditional cheap chic image. It all adds up to an attempt to create more reasons for consumers to visit the store more often, which is important at a time when shoppers remain reluctant to spend on things other than necessities unless they believe they're getting signifigant bargains.

Take into consideration also that Walmart has lately been advertising dollar store-type deals - the retailer once tested a dedicated dollar store section but didn't roll it out â€" and it becomes clear that discount store operators have evinced a real flexibility in the recession through to recovery, one that suggests they are determined to win consumers who have been reconsidering their shopping habits in a difficult economic stretch. One way to do that is to get them into the store more often, which bargains on everyday products can do.