NEW YORK (TheStreet) -- Yes, heart-wrenching. Target (TGT - Get Report) burst into our lives in a big way in the early 2000s, showing us that great fashion for an evening out could be affordable. Sure, buying a TV was likely going to be a little more expensive at Target then mean, nasty Walmart (WMT), but that was OK as Target stores were an exhilarating shopping experience. After years of being depressed by the sloppy racks and dark lighting at J.C. Penney (JCP), Macy's (M), Sears (SHLD), and a host of defunct department stores, an entire generation welcomed a more respectable place to buy goods that probably weren't needed. Heck, this generation even emotionally connected (pre the uprising in puppy picture accounts on Twitter) with the cute Target bulls-eye puppy, Spot.
Quick aside: I believe Target needs to resurrect Spot in its national TV sports and social media marketing to reconnect with customers. You would be surprised by how puppies spread positive vibes, and social activity on Twitter (TWTR) and Facebook (FB).
As a rookie stock analyst in 2004, despite being taught to check biases at the door in the research process, I couldn't help but to be mesmerized by Target's earnings calls. New, designer threads were always being released. Housewares were on fire due to collaborations with up and coming designers. Like Apple (AAPL), there was an anticipation of what was to come next at Target, and the stock price usually benefited from that great unknown. Unfortunately, the Target of 2014 is in serious trouble, and that is not me piling on the sensationalism as to keep you on the Web page. The sad aspect here: The troubles at Target have been quietly building, and are now very present in its U.S. stores and newly opened Canadian division. Problems with culture and store layouts run so deep I wonder if Target has the balance sheet and support in the market to orchestrate the turnaround that is lurking in the weeds looking out three to five years.
Here is an overview of the problems in the U.S. stores:
Grocery: Walmart is making a hardcore push into the supermarket business via its Neighborhood Markets format, which boasts an expansive selection of fresh and dry groceries. Suddenly, Target's food layout, which was implemented in two test markets in Minneapolis in 2008 (and expanded aggressively thereafter), is visually outdated and outmoded compared with Walmart and, believe it not, traditional grocery stores that have upped their games.
Electronics: The most horrifically presented department in Target in my opinion. It's a true afterthought, which is alarming given the outlook for growth in new area of technology (wearables, 4k televisions, etc.). This summer, Walmart will begin re-formatting its electronics department layout to make it easier to shop, as well as to offer a broader plate of goods relative to Target. Best Buy (BBY) will have hundreds of new shops from Sony (SNE) and Samsung prior to holiday 2014 with personalized customer service that bolsters the chance of a closing a sale on the spot. Target has none of this, but you could get an exclusive white Pebble watch. Umm, yeah.
Home: Good ol' J.C. Penney suddenly is staying in business and has 500 easy-on-the-eye shops properly merchandised and promoted. Target has a sloppy home goods section with a few Nespresso end-cap shops appearing of late.
The interesting aspect is that Target's troubles, from a Canadian supply chain to tired U.S. stores, could be shown in two simple photos. No need for an epic slideshow ...l ess is often more.
Here is what Target's overhyped apparel section has become, while other department stores are remodeling changing rooms (more light plus greater size) and adding mannequin innovation. Full of emotionless displays, oftentimes both the men's and women's assortments are under-inventoried.
The one common theme with Target Canada: out-of stocks creating zombie shelves throughout the store. The out-of stocks are not really demand driven; Target just doesn't have its operations structurally sound yet.