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The Minneapolis Star Tribune reports that Target Corp.'s chief goal in divesting its Mervyn's and Marshall Field's divisions - an initiative announced last week, though there haven't been any deals disclosed - is to be able to focus full-time on doing battle with Wal-Mart in the discount and supercenter wars.

While Wal-Mart has three times as many stores in the US and six times as much revenue as Target, the differentiation strategy is to continue to focus on trendier, distinctive marketing efforts but to do so with a leaner company and corporate structure. In addition, food marketing is expected to a major segment in which the two retailer will do battle.

There are differing feelings among analysts as to whether this approach will work.

"Wal-Mart is in for a rude awakening," the NPD Group's Marshal Cohen tells the paper. "Target is going to aggressively pursue the Wal-Mart customer."

But Eric Beder of Northeast Securities told the paper that "people are going to be a little surprised maybe when they clean off all these [department store] negatives to see that the Target chain is not exactly the consistent growth vehicle that management talks about all the time."
KC's View:
The key is creating a compelling, differentiated shopping experience. We think Target will succeed…not in unseating Wal-Mart, but in creating a viable, successful alternative.