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How Target is Becoming “America’s Easiest Place to Shop”
By Dennis Kaiser
Target was one of the holiday season’s success stories, an accomplishment the company credits to investments into improving its physical presence. The Minneapolis-based retailer’s reported same-store sales increased 3.6% in its most recent quarter, with profit jumping 35% to $1.1 billion. That was its third consecutive quarter of growth.
There may be more to the achievement than just bricks-and-mortar. To be sure, e-commerce sales are growing, and the company says stores still are an integral part of its overall strategy going forward. Target CEO Brian Cornell recently told CNBC’s Squawk Box, “The winning retailers of the future are going to combine great physical assets with the ease that comes along with that digital interaction.” Though he also noted, “For the foreseeable future, the majority of U.S. retail sales will still take place at stores.”
Target has plans to remodel 325 more stores this year, including more in urban areas. There’s also plans in the works to launch new brands, expand its ship-from-store capabilities, and offer more delivery and pickup options. Cornell says the goal is to make Target “America’s easiest place to shop.”
Though the company missed its profit target and gross margins narrowed, Target says that was mainly as a result of what it categorized as “pressure from digital fulfillment costs.” The retailer made a huge investment in the future to help improve its digital shopping experience. Those efforts included a $550 million acquisition of Shipt, the same-day delivery startup, as well as revamping stores with areas designed to efficiently handle online order pickups.
The broader retail market rebound may have accounted for part of Target’s sales growth, still its online expansion reflects the realities of a shifting retail environment. Future success for retailers may hinge on which ones adjust their sales and distribution strategies to embrace the rapidly evolving online shopping experience. Target is showing it intends to be one of those that embraces e-commerce, too.
Cornell told investors, “You don’t have to get too far into the numbers to see our strategy is working.”
For comments, questions or concerns, please contact Dennis Kaiser
