F. Adames | R. Juri | S. Khan | S. Kumar | F. Miranda | M. Preciado

TARGET LIFEThe new experience

EXECUTIVE SUMMARY.

Aspiration: Increase growth and penetration in Manhattan, NY., by applying a sustainable solution that can be

progressively applied to other downtown areas of dense mega cities.

Recommendation: Open 3 Target Life stores in Midtown, Upper East and Upper West Manhattan respectively 4 Pop-up stores in high foot traffic areas Improve brand experience through localization, customization and digitization to drive Omni-channel fulfillment

Benefits: ROI of 33% and NPV of $15 M is expected from the project assuming that profit stream from Manhattan is 10X

the Avg. US store (Breakeven 7.52X).

OUR GUESTS.

Midtown...$85,000.00

$90,000.00

$95,000.00

$100,000.00

Upper West Side$85,000.00

$90,000.00

$95,000.00

$100,000.00

$105,000.00

$110,000.00

Upper East Side$85,000

$90,000

$95,000

$100,000

$105,000

Median Income of Households 25-44 Average Household Expenditure

REFER TO EXHIBIT 1-2

Manhattan is above national average ($51,100) in annual expenditure which makes it attractive through our target guest segment.

IMPROVE & INCREASE BRAND EXPERIENCE.

Social generation Adventure seeking Convenience

Boutique Store Experience

Integrate a boutique store experience in Target Life for each category

Localization of store format and assortment in Manhattan neighborhoods

Augmented Reality pop-up stores Omni-channel fulfillment from each store

Social generation Technology oriented Rely on reviews Influence other generations

In-Store Digitization Touch screens to design their space Touch screens in trial rooms and style section

Like discounts & shopping Family & values driven

Advanced Loyalty Program

Reward guests for actions and engagement Customized perks for in-store, mobile and online

purchases

GUEST CHARACTERISTICS SOLUTIONS TACTICS

REFER TO EXHIBIT 3

3 Target Life stores in Midtown, Upper East and Upper West Manhattan.

Target Life store size is 30k sq. feet.

TARGET LIFE.

Build a playroom for kids and comfort café for parents/ mothers

BABIES & KIDS:IMPROVE IN-STORE EXPERIENCE.

BOUTIQUE STORE EXPERIENCE

In-store Farmer’s Market Have ‘specialized’ local chefs prepare small dishes for

guests to try & buy the ingredients in store

Ready-to-eat packaged foods & ingredients in racks

“Be a Master Chef” allows guests to view and try the

Chef’s special ingredients and supplies used for the day

GROCERY:IMPROVE IN-STORE EXPERIENCE.

BOUTIQUE STORE EXPERIENCE

• Sell FitBit through Target Life• Grant guests rewards for doing healthy activities and tracking through FitBit

• Barcode scanner of Fooducate calls up information on nutritional value not shown on food label

• Grant reward points for buying products rated and recommended by Fooducate

• Guests can track workouts from all fitness apps and wearable devices (FitBit to RunKeeper) in one place and earn reward points on it

• Guests can encourage their friends to set and reach their fitness goals• Beacons can be used to suggest related health products for Target Life guests

WELLNESS:INCREASE GUEST ENGAGEMENT.

BOUTIQUE STORE EXPERIENCE REFER TO EXHIBIT 5

Display model rooms (3m x 3m) with Home Brands

STYLE / HOME FURNISHINGS:IMPROVE IN-STORE EXPERIENCE.

BOUTIQUE STORE EXPERIENCE

TOUCH SCREENS:IMPROVE IN-STORE EXPERIENCE.

Guests can browse the whole catalogue in-store near every isle

and for every category The screens will also include product ratings and reviews from

other guests

Guests can rate the products themselves immediately

Incorporate “Design your space”, “Create your look” and “Be a

Master Chef” into all platforms (mobile, online & in-store touch

screens)

IN-STORE DIGITIZATION

“Design your

space”

“Create your look”

Target App

REFER TO EXHIBIT 6IN-STORE DIGITIZATION

Rewards for your Family. Eg: Grant “500 reward points” for family member’s birthdays.

Earn reward points from “FitBit”, “Fooducate” and “Everymove” and redeem for any

Target Life purchases.

Reward points for every dollar spent either in-store, online or mobile. Guests will receive

a voucher of $50 when they reach 5000 points.

GUEST LOYALTY PROGRAM & REWARDS.

ADVANCED LOYALTY PROGRAM

AUGMENTED REALITY POP-UP STORES: CREATE BRAND PRESENCE.

Pop-up Target Life will allow guest to experience

Target in different locations around the city Target Life hosts Pop-up locations can target on-the-go guests Tablets with access to catalogue of Target products

to buy instantaneously Orders in pop-up store for delivery only Use as a pick-up locations in partnership with

Curbside

One underground Target Life store in Midtown: Partnership with MTA to renovate abandoned subway

station Creating brand presence by integrating iconic Manhattan

history

UNDERGROUND TARGET LIFE.

PROS Prime location High foot traffic Enhance brand

personality Increase exposure by

boosting experience

CONS Dependency on MTA Unknown timeline and

cost

REFER TO EXHIBIT 4

An ROI of 33% and NPV of $15 M is expected from the project assuming that profit stream from Manhattan is 10X the Avg. US store (Breakeven 7.52X).

LEASING THE STORE SPACE IS THE VIABLE OPTION TO ENTER THE MANHATTAN MARKET.

REFER TO EXHIBIT 7-9

SUMMARY.

THANK YOU.

Manha

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Downto

wn Man

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Upper

East S

ide

Midtow

n Man

hatta

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Upper

West S

ide0%

10%

20%

30%

40%

50%

60%

18%

8%15%

9%

18%

32%

22%

47%

27%

40%

8% 9%

19%

31%

22%

53% 52%56%

52% 54%

Population Demographics

Household with ChildrenMarried CouplesTotal labor force participation rateFemale Population

EXHIBIT 1. DEMOGRAPHICS

Manhattan Downtown Manhattan Upper East Side Midtown Manhattan Upper West Side$0

$30,000

$60,000

$90,000

$120,000

$150,000

$180,000

$87,123

$174,004

$90,472 $95,744

$93,449 $85,590

$106,130 $102,527

$89,626

$104,427

Median income of households 25-44 Average household expenditure

EXHIBIT 2. INCOME/EXPENDITURE

Superior Inputs

Superior Collaborators

Superior Data & Insights

Superior Offering & Branding

Superior Target

Sources of competitive advantage

Product Leadership“Best Product”

Operational Excellence“Best Total Cost”

Customer Intimacy“Best Customer Relationship”

Functional

Emotional Experiential

EXHIBIT 3. IMPROVE & INCREASE BRAND EXPERIENCE.

London• Transport for London is inviting companies to transform abandoned tube stations. • Network worth of abandoned stations is approximated at 3.6 B pounds.• Old London Ground company working on repurposing Stations and tunnels into

clubs, hotels, retail stores, malls and tourist attractions.

Paris• Museum D’orsay repurposed train station into an art Gallery• Subway stations being repurposed into public attraction in planning phase

New York • High Line Park in Manhattan, community and government project to use Highline as

a Park, initial costs were 150 million. High community support and being extended with theaters and other outlets

Strong potential: Below Waldorf Astoria

EXHIBIT 4. UNDERGROUND TARGET LIFE

EXHIBIT 5. MILLENNIAL GUESTS ARE HIGHLY RELIANT ON MOBILES WHILE SHOPPING IN-STORE AS WELL.

Beacons: Low-cost hardware with low-energy Bluetooth connections to transmit messages or prompts directly to mobiles.

Greet guest with personalized messages.Prompt about latest promotions and products based on

search history.Drive mobile purchasing based on promotions or prompts.When guests pick up in-store, beacons can be used to

transmit information on related products for additional purchases.

In-store navigation and product reviews based on real-time analytics.

EXHIBIT 5A.

Design Your Space• Allow guests to design their room with Target home brands on touch

screens in-store• The space will be the same as the model room in store• Drag & drop the products on a blank space to design their own• “Add” all the liked products directly to the cart (Mobile app + Online

account)• Order products in-store/ mobile app and “Add” delivery to home

Create Your Look• Allow guests to browse different patterns, sizes or colors of an

apparel• Guests can pair one product with another (Eg: One shirt with

different denims or jewelry)• Guests can also do this for babies and kids category• In trial room and near the apparel section, guests can create their

look and browse through related products

TARGET APP

EXHIBIT 6.

EXHIBIT 7. RENTING

Outflows Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Store 1Building/store rent -$2,238,000.00 -$2,305,140.00 -$2,374,294.20 -$2,445,523.03 -$2,518,888.72 -$2,594,455.38 -$2,672,289.04 -$2,752,457.71 -$2,835,031.44 -$2,920,082.39 -$3,007,684.86Set up cost -$900,000.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00Store 2Building/store rent -$2,238,000.00 -$2,305,140.00 -$2,374,294.20 -$2,445,523.03 -$2,518,888.72 -$2,594,455.38 -$2,672,289.04 -$2,752,457.71 -$2,835,031.44 -$2,920,082.39 -$3,007,684.86Set up cost -$900,000.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00Store 3Building/store rent -$2,238,000.00 -$2,305,140.00 -$2,374,294.20 -$2,445,523.03 -$2,518,888.72 -$2,594,455.38 -$2,672,289.04 -$2,752,457.71 -$2,835,031.44 -$2,920,082.39 -$3,007,684.86Set up cost -$900,000.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00Pop upsTen Pop up stores -$200,000.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00Rent Pop up stores -$50,000.00 -$51,500.00 -$53,045.00 -$54,636.35 -$56,275.44 -$57,963.70 -$59,702.61 -$61,493.69 -$63,338.50 -$65,238.66 -$67,195.82

TOTAL OUTFLOWS -$9,664,000.00 -$6,966,920.00 -$7,175,927.60 -$7,391,205.43 -$7,612,941.59 -$7,841,329.84 -$8,076,569.73 -$8,318,866.83 -$8,568,432.83 -$8,825,485.82 -$9,090,250.39

Inflows Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Store 1Profit flow from store 1 $0.00 $3,819,240.00 $3,933,817.20 $4,051,831.72 $4,173,386.67 $4,298,588.27 $4,427,545.92 $4,560,372.29 $4,697,183.46 $4,838,098.97 $4,838,098.97Store 2Profit Flow from store 2 $0.00 $3,819,240.00 $3,819,240.00 $3,819,240.00 $3,819,240.00 $3,819,240.00 $3,819,240.00 $3,819,240.00 $3,819,240.00 $3,819,240.00 $3,819,240.00Store 3Profit Flow from store 3 $0.00 $3,819,240.00 $3,933,817.20 $4,051,831.72 $4,173,386.67 $4,298,588.27 $4,427,545.92 $4,560,372.29 $4,697,183.46 $4,838,098.97 $4,838,098.97Pop upsProfit flow from Pop ups stores $0.00 $254,616.00 $262,254.48 $270,122.11 $278,225.78 $286,572.55 $295,169.73 $304,024.82 $313,145.56 $322,539.93 $322,539.93

TOTAL INFLOWS $0.00 $11,712,336.00 $11,949,128.88 $12,193,025.55 $12,444,239.11 $12,702,989.09 $12,969,501.56 $13,244,009.41 $13,526,752.49 $13,817,977.86 $13,817,977.86

NET CASH FLOWS -$9,664,000.00 $4,745,416.00 $4,773,201.28 $4,801,820.12 $4,831,297.52 $4,861,659.25 $4,892,931.83 $4,925,142.58 $4,958,319.66 $4,992,492.05 $4,727,727.47

EXHIBIT 8. ACQUIRING

Outflows Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Store 1Building/store Investment -$60,000,000.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00Store 2Building/store Investment -$60,000,000.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00Store 3Building/store Investment -$60,000,000.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00Pop upsTen Pop up stores -$200,000.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00Rent Pop up stores -$50,000.00 -$51,500.00 -$53,045.00 -$54,636.35 -$56,275.44 -$57,963.70 -$59,702.61 -$61,493.69 -$63,338.50 -$65,238.66 -$67,195.82TOTAL OUTFLOWS -$180,250,000.00 -$51,500.00 -$53,045.00 -$54,636.35 -$56,275.44 -$57,963.70 -$59,702.61 -$61,493.69 -$63,338.50 -$65,238.66 -$67,195.82

Inflows Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Store 1Profit flow from store 1 $0.00 $3,819,240.00 $3,933,817.20 $4,051,831.72 $4,173,386.67 $4,298,588.27 $4,427,545.92 $4,560,372.29 $4,697,183.46 $4,838,098.97 $64,983,241.93Store 2Profit Flow from store 2 $0.00 $3,819,240.00 $3,933,817.20 $4,051,831.72 $4,173,386.67 $4,298,588.27 $4,427,545.92 $4,560,372.29 $4,697,183.46 $4,838,098.97 $64,983,241.93Store 3Profit Flow from store 3 $0.00 $3,819,240.00 $3,933,817.20 $4,051,831.72 $4,173,386.67 $4,298,588.27 $4,427,545.92 $4,560,372.29 $4,697,183.46 $4,838,098.97 $64,983,241.93Pop upsProfit flow from Pop ups stores $0.00 $254,616.00 $262,254.48 $270,122.11 $278,225.78 $286,572.55 $295,169.73 $304,024.82 $313,145.56 $322,539.93 $332,216.13

TOTAL INFLOWS $0.00 $11,712,336.00 $12,063,706.08 $12,425,617.26 $12,798,385.78 $13,182,337.35 $13,577,807.47 $13,985,141.70 $14,404,695.95 $14,836,836.83$195,281,941.9

3

NET CASH FLOWS -$180,250,000.00 $11,660,836.00 $12,010,661.08 $12,370,980.91 $12,742,110.34 $13,124,373.65 $13,518,104.86 $13,923,648.01 $14,341,357.45 $14,771,598.17$195,214,746.1

1

EXHIBIT 9. ASSUMPTIONSTotal Sales in 2013 $72,596,000,000.00Sales by Sq Ft 254,243,000.00Sales by Sq Ft $285.54Assumed Faltor in Manhattan (X) 10Sales by Sq Ft in Manhatan $2,855.38Total Profit in 2013 $1,971,000,000.00Profit per Sq Ft $7.75Store 1 Store cost (sq ft) 30,000.00Store 2Store cost (sq ft) 30,000.00Pop-up storesNumber of Pop Ups stores 4Cost of a Pop Up Store -$50,000.00Por up Size (sq ft) 500Sales by sq ft (proyected 2015) $309.00Sales by sq ft in Manhattan (2015) 3090Net Profit Margin 4%Profit by sq ft in Manhattan (2015) 123.6Income/cost growth rate 3%Commetcial Rent price per Sq FT in manhattan $74.60Pop up Rent price per Sq FT in Manhattan $25.00

POLITICAL

SOCIAL

• Health regulations, taxes on food products impacting sales or margins for retailers.

•High sensitivity to economic cycles (taxation, Interests rate and economic growth) •Strong competitive landscape requires differentiation to survive.•Labor cost is the biggest operating expense.•Less disposable income shifting consumption from luxury items to value brands.•Target owns 86% of the building where the store is located so its exposed to real estate fluctuations.

• Health awareness and Organic trend.• Bulk Shopping to One stop shopping.• Social media influence and mobile shopping

ECONOMIC

PESTLE ANALYSIS.

TECH

ENVIRON.

LEGAL

• Online trend where differentiation is key.• Self-service checkout points.• Mobile and Digital tools.

• Any legislation that affect price.

• Reduction of carbon footprint.• Minimize waste.

PESTLE ANALYSIS.