Photo: Target
Do Americans think that Target is the easiest place to shop?
Target was focused on becoming the easiest place to shop for Americans well before the novel coronavirus pandemic changed so much of how they live their lives. When COVID-19 hit, Target used its same-day services and local fulfillment options to attract millions of new customers, driving record quarterly results in the process.
The retailer announced that it posted sales to record new levels a 24.3 percent gain in same-store sales as digital comps skyrocketed 195 percent and physical locations posted a 10.9 percent gain.
Sales from same-day services (Order Pick Up, Drive Up and Shipt) grew 273 percent. Target’s drive up service saw the biggest percentage growth at 734 percent during the quarter.
“Our stores actually drove more than 90 percent of our second-quarter growth,” said Target CEO Brian Cornell on the retailer’s earnings call yesterday. “Given that they enabled more than three-quarters of our digital sales and an even higher percentage of our digital growth, store base fulfillment is uniquely suited to our business model because of the way it fits within our overall strategy. In particular, it aligns with our merchandising approach, which is based on curation, both in our stores and online assortments.”
Target said it has picked up “unusually strong” gains across its five core categories.
Apparel, which was down 20 percent in the first quarter was up 40 percent in the second. Consumer electronics were up 70 percent, the home category gained 30 percent and beauty, which increased 10 percent in the first quarter, doubled that over the latest three months.
Sales of the food/beverage and essential goods categories were up 20 percent, below the first-quarter rate, as consumers did less stocking up than when the pandemic first hit. Mr. Cornell touted the success of the “Good and Gather” private grocery label with sales at more than $1 billion in its first year.
Target’s CEO also discussed the retailer’s upcoming plans.
The chain is extending its back-to-school merchandising with many households uncertain if kids will be returning to physical classrooms, learning remotely or some combination of the two.
Mr. Cornell said Target will offer Christmas deals beginning in October “so guests can shop safely and conveniently, without worrying about missing out on deals that usually come only late in the season.” The retailer will also add “thousands of additional items” to its list of same-day service items.
- Target Corporation Reports Second Quarter Earnings – Target Corporation
- Target Corporation CEO Brian Cornell on Q2 2020 Results (Earnings Call Transcript) – Seeking Alpha
- How can retailers differentiate curbside delivery? – RetailWire
- Will expanded fresh and frozen food selection drive Target’s pickup business? – RetailWire
- Are Target’s skyrocketing online sales retail’s new normal? – RetailWire
- Will a brand refresh make Shipt a household name? – RetailWire
- Will a loyalty program give Americans more reasons to shop at Target? – RetailWire
- Will a new grocery private label spur more Target runs? – RetailWire
- Did Target just become the easiest place to shop for Christmas? – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: What stands out to you most about Target’s success during the pandemic months? Where do you see areas in need of improvement and what do you expect of the chain should it be successful in addressing them?
Poll
BrainTrust
Cathy Hotka
Principal, Cathy Hotka & Associates
Dave Bruno
Director, Retail Market Insights, Aptos
Target is simply doing everything right. This exceptionally well-run company is focused squarely on the future, with exceptional processes and inspiring merchandising. Their masks are terrific, too. Two big thumbs up!
Target is easy to shop. It invested in omnichannel long before the pandemic hit and the connections between stores and online have paid real dividends during this disrupted period. But the real key to success is that Target sells things people actually like and want to buy. Over the past three years, ranges and own brands have been developed and that has helped make Target a great place to shop. As shopping at malls and other destinations has fallen out of favor due to the current crisis, Target has become more of a destination and has taken a greater share of wallet. Basically, consumers are consolidating their shopping into fewer trips, and Target is one of the places they still make a point of visiting and buying from.
Target has been doing a lot of the right things to improve the customer experience and fortunately they had most of the omnichannel, curbside and delivery services in place before the pandemic. While I think Target is doing a stellar job as a one-stop shop with a great customer experience, most of the galactic growth can be attributed to the fact that they were considered an essential business and remained open while specialty stores were closed for a couple months. Walmart, Costco, and many grocers have experienced similar sales growth numbers (Walmart’s second quarter same store sales increased 23.4 percent).
One of the biggest standouts to me after listening to the earnings call was that Target saw a 30 percent increase in overall spend AFTER consumers tried curbside pickup with them, and that includes in-store shopping.
This demonstrates that digital or curbside capabilities can do more than just “top up” the cupboard – it can improve the overall omnichannel experience. Digital first doesn’t mean digital only.
Target’s successes are a combination of good strategy, great execution, and good timing. Without question they have succeeded at becoming extremely easy to do business with. They had been working on this strategy for quite some time before the pandemic struck, so they had time to design new processes, train their stores, and incorporate customer feedback to optimize these services. Consequently, when the pandemic struck and suddenly safe, convenient shopping options became critical, Target was able to capitalize – in a big way. Kudos to them, too. I have been thoroughly impressed with the design and execution of their curbside processes, and look at Target as a model for others to emulate.
Target actually started touting the multiple ways to shop last holiday season in their commercials. They are continuing that theme in their current digital, TV and print content. They are really pushing their Target Circle program with a big focus on Target’s saving for customers. I expect Target to continue to refine their processes and focus on customers to help them shop for what they need.
While a lot has been said about all of the tactical successes of Target over the past several months, one thing that hasn’t been talked about is the merchandise they offer. The merchants at Target continue to delight their guests in multiple departments and this has and will be extremely important to the success of the company.
Target is the easiest because it is the best one-stop shop. Well curated assortments across home, apparel, grocery, electronics, and pharmacy. They cover a lot of ground and eliminate the need for multiple stops. And they do it with good product, good value and a great range of last mile options. And it didn’t take a pandemic for them to invest in this level of product and service. They did it because it was the customer-centric thing to do — years ago. They didn’t do the minimum while the race to the-bottom was in full bloom. They did the maximum to position themselves for a differentiated future. Mission accomplished.
What stands out to me about Target’s success during the pandemic is that they were prepared. The way people are shopping in the pandemic is where things were heading anyway, the pandemic just accelerated them. Target had been on this trajectory for two or three years when they refocused on the business when it was threatened in late-2016/early-2017. BOPIS, store pick-up, private label and, most importantly, being consistent in delivering trust. And trust is what the guest is always most attracted to, especially during this time.
As for improvement, it’s hard to say. Don’t lose sight of the blocking and tackling. Keeping product in-stock, continuing to improve their e-commerce experience, listening to the guest and not being afraid to take risks to learn. If successful, I expect an even more fierce competitor to Amazon.
Target’s decision to go more aggressively after food, years ago, was a critical driver of the success they are enjoying today. But what really stands out to me is the dramatic improvement in their fulfillment systems where they are now among a few retailers that are fulfilling the vast majority of orders directly from stores, which allows quicker shipping at lower rates.
Speed differentiates Target, given its same-day delivery and local store fulfillment.
Fast deliveries would give Target an edge in grocery, which is all about product freshness and quality. Wowing grocery shoppers with prompt delivery could help Target earn top-of-mind status and loyalty. A distinct assortment strategy, including more fresh foods and popular private labels, could also entice consumers to make shopping at the chain part of their weekly habit.
Target is easy and fun to shop, no question about it. Mixing fashion with great pricing, expansive selection, and open, well laid out store formats. Particularly noteworthy is the cosmetic department. Associates working restocking know the products first hand. Lucky for me their recommendations have been top-notch!
This article is about how easy – or convenient – it is to shop at Target. Look at the options; in-store, online, drive-through order pickup, etc. This is all about giving the consumer what they want, how they want it. Every retailer, big and small, can take notes on how Target has become one of the most convenient retailers to do business with. That’s a big part of what customers want and expect today.
Target is benefitting from a one-two punch in the market. One, they’ve mastered omnichannel fulfillment in the way that matters most – to the customer. They truly are easy to shop. Although not perfect, as we’ve discussed here on RetailWire recently, they still have room to improve product eligibility for curbside pickup and Shipt delivery. However the options they give consumers are what consumers want, and that makes every difference in the world to make Target the go-to store for shoppers. The second punch is something many other retailers are suffering from – having the products people want and are willing to buy. Target’s assortment has transformed them into America’s new department store. While the apparel sector is struggling with consumers seemingly not interested in buying the latest fashions, Target shows an increase in apparel sales. It’s not just convenience that makes them a powerhouse, it’s also the assortment, brand image, and everything else consumers look for during the pandemic. Target is firing on all cylinders and it will be interesting to watch their performance as we approach the holiday shopping season.
Target focused on BOPIS and other omnichannel initiatives long before the lockdown, and it paid off. It also didn’t hurt that its stores stayed open while many others closed, so it was able to sell “non-essential” categories like apparel. But the biggest reason for Target’s success is the company’s focus on improving its merchandise content under Mr. Cornell’s leadership — this was already paying dividends, especially in apparel and soft home, long before the pandemic.
The thing I admire about Target is that it is essentially a big vanilla box with great merchandising that makes you go in for one item and come out with a cartload. We call that the Target Syndrome. The sales floor is silent so there’s not even music to entice shoppers to spend.
When you put together an exciting product selection, strong in-store merchandising and signage backed up by memorable commercials, an easy to shop website, plus all the services and conveniences Target offers it’s easy to see why we love to shop there. And then there’s the cool factor: People proudly say “I got it at Target,” they don’t say that so much about Walmart. At least not yet.
Target has made enormous strides in the last couple of years to shore up e-commerce, expand channel capabilities and update and modernize their stores. When the pandemic came, they were well positioned to meet their customers’ needs for touch-free fulfillment. I’m very glad to see my alma mater’s strategies paying off with growth in sales and revenue and more importantly new customer acquisition.
We should also take note that on their earnings call this week they quoted a 30 percent reduction in cost of fulfillment for online orders. That’s huge — a big change from even a few months ago. Well done.
Simple + Clean with Consumers Trusting Target’s COVID Safety Protocols + Right Demo + Right Product + In-Stock + Impeccable Execution. See why we believe that Target will comp mid-teens in the 2H and what’s the outlook for mass merchants post COVID.
What stands out is the breadth of Target’s success. Every category and sales channel grew substantially. The only area of improvement might be in SKU selection — pruning out slow-moving merchandise and adding new SKUs. Target will be able to address SKU changing due to the vast amount of information its collects and follows in its daily business.
Target did well because they were allowed to stay open as an “essential business” while so many of their competitors like the entire mall, plus various big boxes like Best Buy, Kohl’s, TJ Maxx, Ross, etc. did not get to stay open. It was literally the only place the “I am too good to shop at Walmart” crowd could go shop. Today, as a result of that, Target Stores are littered with thousands of out-of-stocks all over various of their general merchandise areas including home (kitchen, bed, bath, etc.), baby, furniture, and various others.
Whether or not they hold on to their new customers remains to be seen.
Simple clean stores, great online, stylish, fantastic, so well run and with incredible execution — they are “cooking with gas!”