Best Buy’s most recent successful financial results demonstrate that the consumer electronics industry is far from dead and points to an underutilized opportunity for Target. Addressing consumer electronics more aggressively affords not only the ability to dramatically increase consumer electronics revenue at Target, but more importantly, allows the retailer to compete more effectively with Amazon.
Consumer electronics has not been granted the priority status within Target like categories such as apparel, toys, baby and wellness. Target has chosen to prioritize these non-consumer electronics categories in order to align with the needs of its core customer (Target Guests). While these prioritized categories are indeed tightly aligned with Target’s core customer, consumer electronics, as a core customer need, has grown disproportionately to the point where Target’s lack of expertise in this category is negatively impacting its overall bottom line.
By comparing the Target Guest to its competitors through our Retail Pulse consumer survey, we found four key points that prove the retail giant is missing out on a prime opportunity.
1. Target Guests Are More Tech Forward
The Target Guest is much more tech forward, with 50% of Target’s core customers regularly using smart phones, laptops and tablets. Comparatively, 46% of Amazon’s core customers and 40% of Walmart’s regularly use this technology.
2. Target Guest Spends More on Consumer Electronics
33% of Target’s core customer base self-identified as spending more than the average household for consumer electronics, while 29% of Amazon customers and 26% of Walmart’s customers spent more than the average household on consumer electronics.
3. Target Guests Are Leaving Target to Shop Consumer Electronics Elsewhere
Only 54% of Target Guests shop for consumer electronics at Target, indicating that nearly half of Target’s regular customers aren’t even considering Target for their consumer electronics needs. Instead, they are going to Best Buy (46%), Walmart (46%), and Amazon (43%). These leakage rates are much higher than other categories at Target.
4. Target’s Weakness in Consumer Electronics Hurts Target Overall
The fact that the Target Guest is so technically advanced and is likely to spend so much more on consumer electronics creates an opportunity for Amazon to pry customers away from Target. Amazon can utilize its strength in consumer electronics to pivot Target Guests to areas where Amazon is not as strong (kids, style, baby, wellness), which would only quicken the pace of the Amazon creep that is already threatening Target.
Developing a more aggressive consumer electronics plan, with an intense focus on the mobile needs of the core Target Guest, would keep the highly-valued Target Guest more strongly engaged with Target across its entire ecosystem. Simply put, consumer electronics has become a central category need to the Target Guest, more so than any other retailer next to Best Buy. Not addressing consumer electronics as a priority category is a misalignment with the needs of its core customers.