Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Saturday, August 20, 2005

Target Buys All Ad Space in The New Yorker;
Effect on Wal-Mart Could be Positive

Target has bought all the advertising space in one issue of The New Yorker. This seems odd, given the antipathy of (some/many) New Yorkers toward massive discount stores. Or is their antipathy only toward Wal-Mart as a symbol?

Target has purchased every advertisement in The New Yorker. At first glance, Target and The New Yorker seem like an odd match. (The last time Target pulled off the buy-every-ad gimmick, it was the sole sponsor of an issue of People.) Only recently did the "Bloomingdale's of the discount industry" vanquish Wal-Mart and Kmart to win the hearts and minds of the middlebrow. Moreover, when compared to the modish boutiques that usually advertise in the New Yorker, Target looks rather vulgar; there is no sign at the entrance of Louis Vuitton, for example, that reads "Welcome to Low Prices."
How will this strategy affect Wal-Mart? Will Target get an advantage by appealing to the middle-brow market of New Yorkers? We know from the past that Wal-Mart has been attempting to upgrade its image, in apparel especially, and so the image-reshaping is going on at both chains.

In a Christmas photo op, Michael Bloomberg was seen exiting a local Target clutching a George Foreman grill and a cheese grater, gifts that would surely please one of the gardeners at Gracie Mansion.

That, in a nutshell, is the story of Target's blossoming—making discount acceptable for the rich and famous, and, hence, everyone else. But the appeal Target holds in the minds of the upper crust does not end there. The rich (at least in Manhattan) profess to visit Target because of its social progressivism. Target, they insist, is a more enlightened corporate behemoth. Viewed through the Upper West Side prism in which "enlightened" equals "liberal," there is some truth to this contention. Sam Walton's heirs donate to the GOP, while Target scion Mark Dayton serves as a Democrat in the U.S. Senate. But because Target isn't as large as Wal-Mart means certain bugaboos (a nonunion shop, part-time workers without benefits) are more easily overlooked.
So the major problem with Wal-Mart (for Wal-Mart haters) is that it supports the Republicans and it is large. They will consider shopping at Target, however, even though Target has labour and import policies that are very similar to those of Wal-Mart.

My guess is that if the advertising by Target in The New Yorker works, however that might be defined and assessed, it will initially have the effect of stealing a bit of market share from Wal-Mart, but not much -- after all, what's to steal from Wal-Mart in Manhattan? But in the longer run, in this case perhaps only a few months, if middlebrow elitist-wannabes begin to set foot in Target, the effect might also be to increase the demand for goods at Wal-Mart as well. Once people get the taste of reasonable quality at very low prices, and once they realize that both large chains have similar labour and trade policies, they might be more likely to accept a Wal-Mart in their neightbourhood.

In other words, the effect of Target's buying all the advertising space in The New Yorker might be to let people know that it is okay for the middle and upper classes to shop at large discount chains.

[cross-posted at Always Low Prices]
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