Target testing late-night shopping

Apparently hoping a few more hours a day may be an easy step to boosting top-line growth, Target is reportedly testing the extension of hours at more than half of its stores in the U.S.

On weekdays and Saturday, many stores will close at 11:00 p.m. or midnight versus 10:00 p.m. previously, according to a report in the Wall Street Journal. On Sundays, closing time is 10:00 p.m. or 11:00 versus 9:00 p.m. previously. The stores will continue to open at 8:00 a.m.

The new hours, which start this month, will be tested through the holidays. Target spokesman Eric Hausman told the Journal that shoppers had been asking for longer hours and that a number of shoppers were still in the store near closing time.

"We did a lot more analysis into how big an opportunity this is, and there is a really big opportunity here," Mr. Hausman said.

Holiday shopping hours have been aggressively extended by many stores over the last few years with many open for multiple-days before Christmas. But non-holiday hours have generally been left unchanged in recent years.

Target has been conservative with extended hours compared to its chief rival, Walmart, which reportedly keeps 70 percent of its U.S. stores open 24 hours a day.

However, an Associated Press report back in 2011 noted that Walmart is shifting select locations in such places as Indianapolis, Montgomery, AL, Fayetteville, NC, and Baltimore from 24-hour schedules to 6:00 a.m. to midnight hours to better reflect shopping patterns in those regions. Other chains operating at least some 24-hour stores include Meijer, Kroger, Marsh and Kmart.

Among the majors, Costco has the reputation for the fewest operational hours. The warehouse club’s hours are:

  • Weekdays: 10:00 AM – 8:30 PM
  • Saturdays: 9:30 AM – 6:00 PM
  • Sundays: 10:00 AM – 6:00 PM

 

BrainTrust

Discussion Questions

What factors should be explored in any decision to extend daily hours? Have Target’s comparatively lean operational hours provided Walmart with a competitive advantage?

Poll

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Dick Seesel
Dick Seesel
9 years ago

Target needs to consider where it is losing share to Walmart in competitive locations, and it also needs to consider (obviously) the cost-benefit of more sales vs. more payroll and other expenses. It’s certainly worth the test, and Target might also consider earlier openings. There has to be some business left on the table by opening at 8 a.m. instead of 7 a.m., and missing the morning rush before people are stuck in their commutes to work.

It will still come down to content, however: As the article points out, Costco goes its own way when it comes to store opening hours (and it’s famously closed on federal holidays like Memorial Day and Labor Day). None of this seems to affect Costco’s continuing ability to gain share.

Dr. Stephen Needel
Dr. Stephen Needel
9 years ago

This should be pretty easy to figure out. Cost of labor and utilities vs. profit in those extra hours. Hard to imagine they’ve lost ground with their shorter hours.

Kelly Tackett
Kelly Tackett
9 years ago

The anytime, anywhere shopper does not respond well to the confines of traditional store hours. They have many alternatives, not only 24-hour Walmart locations but perhaps more importantly online retailers.

In addition to the wage costs associated with longer hours, Target also needs to think about the appearance of its stores. There’s nothing so frustrating as trying to navigate down an aisle that’s in the middle of restocking (and that’s been my recent experience during the DAY, so I can’t even imagine what it would be late in the evening).

Lastly, longer hours may boost traffic, but Target still has a fundamental problem with a lack of exciting merchandise—a necessity if it wants to build basket size.

J. Peter Deeb
J. Peter Deeb
9 years ago

This decision requires fact-based analysis and decision making. Target can analyze by location, by proximity to competitors who remain open and more importantly by the metrics of each of their locations to make this determination. I am amazed by the generalities that many retailers use to dictate key aspects of their businesses, including operating hours, when they have so much data in their own systems and the ability to make observations (i.e., one hundred cars in the Walmart lot one-fourth of a mile away) to help them run their businesses.

Cathy Hotka
Cathy Hotka
9 years ago

This is a big opportunity for working parents.

A lot of working mothers are busy until 9:00 p.m. Target’s new hours allow them to get some quality shopping in—in the store—after the kids are in bed. When my kiddos were small, I did all my Christmas shopping after-hours.

Let’s hope the test works as expected.

Gene Hoffman
Gene Hoffman
9 years ago

Night owls now have another shopping option at Target whenever they run out of diapers or work a second shift. Since Target is lacking in the number of customers it wants and needs, why shouldn’t it give night buyers a chance to strengthen its sales? Will that be enough to recapture its past vitality? I tend to doubt it. Target’s comparatively lean hours may have given Walmart a competitive advantage but the hours are second to other reasons.

Paula Rosenblum
Paula Rosenblum
9 years ago

These types of extended hours are all about grocery, I think. I don’t see it doing much for general merchandise and apparel.

In some ways, this disappoints me. I was hoping to see Target shift its focus back to more interesting products, but I suppose it’s good to start from where you are, and that’s where Target is now.

There is a lot of math to this equation, as others have observed. It’s not simple. I wish Target luck.

Robert DiPietro
Robert DiPietro
9 years ago

The easy equation is, will the sales/margin increase offset the additional labor and operational expense? The other part is, will extended hours provide any new customer acquisition?

Target needs to ensure the store standards will be on par with normal operating hours during the extended hours.

I don’t think it’s meaningfully competitive for Walmart, as sales traffic is low during off-peak hours.

Shep Hyken
Shep Hyken
9 years ago

The main factor in a decision to extend daily hours should be the location and demographic of the typical customer. Do other businesses in the areas support an around the clock or extended schedule? Example: Stores can open early in the morning to catch workers who go in for the early shift and come off the graveyard shift. It wouldn’t surprise you to see customers in the store at 5:00 a.m.

As for competing with Walmart? My suggestion is, decide what business you’re in and who is your customer. If you compete head-to-head with Walmart, then competing at their level may be the way to go. Costco has chosen not to compete on store hours. It hasn’t seemed to hurt them.

I interviewed an owner of an Ace Hardware store who competes with his next door neighbor, Home Depot. Home Depot’s hours are from 6 a.m. to 10 p.m. The Ace Hardware store is open from 7:00 a.m. to 6:00 p.m. The store owner knows his customers, what they want and when they buy. He’s chosen another lane, and it works for him.

Liz Crawford
Liz Crawford
9 years ago

It seems a little goofy that it has taken this long for Target to understand that longer hours is “a big opportunity.”

Walmart has over two-thirds of its stores open 24/7, effectively becoming the go-to retailer for almost every category, because shopping trips don’t need to be planned. By comparison, even Target’s new extended hours are abbreviated. This means that shoppers need to plan their trip, and so some trips won’t happen, and others will necessitate the shopper accommodating the retailer (rather than the other way around).

The internet changed the game when it comes to shopper expectations. The bar has been raised and convenient hours is only one aspect of being completely “shopper-centric.”

Joan Treistman
Joan Treistman
9 years ago

I agree with Cathy in that my gut reaction relates to moms with young children who would like some quite time to shop. But of course there has to be appropriate merchandise to make that shopping time worthwhile for the customer and sufficient revenue for Target.

Stores in my Manhattan neighborhood are increasing their hours as well; D’Agostino’s, Duane Reade, and Food Emporium. I assumed it was in response to the Whole Foods down the block that started off (when it opened) being open until 11pm. There are a lot of people, besides moms, out there who work late or discover what they’re out of late in the evening.

Larry Negrich
Larry Negrich
9 years ago

I don’t have their shopper, location, sales, labor, and competitor data, so I have to believe that Target, a historically bright company, is making a good decision to extend shopping hours.

What I have noticed about Target is how consistent their shopping experience has been. Wide, clean, brightly-lit aisles with well-stocked shelves and a reasonable number of associates to help shoppers all make for a good experience. But at some point, consistent becomes non-exciting and the lack of some new energy means people are not compelled to visit often.

So extend hours if the analytics show opportunity but to drive shopping and sales, I think that all retailers should look for ways to keep making the shopping environment interesting and the shopping experience fresh.

Jonathan Marek
Jonathan Marek
9 years ago

More retailers need to be more aggressive about testing hours and differentiating by store. With transaction log data now available and analyzable, retailers should be able to clearly read all the economic levers of the decision:

  • how much do they sell in the extended hours?
  • how many of those sales are transferred from other day parts (earlier in the evening and the next day) versus being truly incremental?
  • how much does labor increase?
  • what is the ROI?

Then, the best retailers can figure out how all of those numbers vary store-by-store, so that they can target extended (or reduced) hours to exactly the right stores.

Steve Montgomery
Steve Montgomery
9 years ago

In my experience, the additional hours often don’t generate the additional sales one expects in and of themselves. The largest increase was in what we refer to as the shoulder hours. Those are the hours before the former closing hours. By being open longer, customers feel comfortable in starting a shopping trip they might not have taken because the don’t feel squeezed by the closing time.

Ed Rosenbaum
Ed Rosenbaum
9 years ago

This is not difficult for Target to determine the hours and advantages. Frankly, I do not see a value in opening the entire store for longer hours. But I can see where it would be good for customers working long hours to do their grocery shopping later.

I hope we are not getting in to a holiday season game of “I can stay open longer than you can.” Remember, if the store is open longer, the employees are working longer hours too.

Naomi K. Shapiro
Naomi K. Shapiro
9 years ago

This is an easy one: The hours should match the needs and schedules of the demographic. And I don’t think it’s only about groceries. And yes, Target’s been giving Walmart a competitive advantage. Think about it: When Target closed, customers could go to Walmart to round out their shopping. Now if there’s a level playing field, Target can keep the customers shopping right up to closing time.