Target partners to increase profit margins 

You’ve probably noticed that there are a lot of these “super” stores popping up.  Walmart has gigantic stores, for example, Target has Super Target, and HEB has HEB Plus now. While there are a lot of benefits to have larger stores, Target is showing us how to take this to another level. 

During one of my visits to Super Target, which has TONS of products and services, I noticed there was a Starbucks inside. I was wondering to myself, why is there a Starbucks INSIDE of Target? Well both of these companies are utilizing strategic partnerships to increase the profit margins for their business. Both Starbucks and Target are using economies of scale with one of these huge buildings (which is what the “super” stores do) but they are splitting rent and therefore reducing the amount of rent they have to pay for their business. In addition to that benefit, they are also getting a combined marketing effect.  If someone walks into Target to buy their products, Starbucks might benefit from the foot traffic, and vice versa, if someone walks in for Starbucks, Target might benefit as well. This again shows how Target and Starbucks are effectively reducing expenses for their business by leveraging each other’s marketing and reducing the amount of marketing they have to spend for their individual business. Both of these activities are reducing expenses for their respective businesses which in turn increases the profit margin for both businesses. 

So what is your version of the Target and Starbucks strategic partnership?  How can you in your business increase your profit margins by using strategic partnerships? If you can’t seem to figure it out contact us and we will definitely help you out.

We offer a complimentary 2-hour strategy session (a $2000 value) for businesses that want to look at opportunities in their business. We can chat briefly about the details of that session to see if it would be beneficial for your business.