Is Target ready for Amazon and Walmart this holiday season?
In August, Target reported that its quarterly same-store sales had grown to a 13-year high. CEO Brian Cornell credited Target’s “enhanced and differentiated shopping experience” as being the prime mover behind strong increases in traffic and sales at the chain’s stores and target.com. Heading into the Christmas selling season, Target is feeling good about its prospects as the retailer has regained its “cheap chic” mojo while giving consumers a variety of reasons to believe it is “America’s easiest place to shop.”
The changes management has made in recent years has put Target in a favorable position to compete against all comers, including Walmart and Amazon.com, Stacey Widlitz, president and chief international store hunter at SW Retail Advisors, told CNBC.
“I think Target has a more differentiated product assortment than Walmart today,” Ms. Widlitz said. “They have the product to win, and now they are putting the tools in customers’ hands — like two-day shipping.”
“Customers are now like: ‘Wait a minute. Target behaves like Amazon, and they have strong private label categories. Why would I not add some extra stuff in my basket?'” she said.
Target has seen a turnaround in its own and exclusive brands over the past couple of years with strong sales from the Cat and Jack private label for kids, Goodfellow & Co. for men and others.
The retailer introduced four new private labels in the second quarter with a focus on appealing to Millennial and Gen Z consumers.
On Target’s second quarter earnings call, chief merchandising officer Mark Tritton pointed to Wild Fable, a new apparel and accessories brand for women, and Original Use, “a street meets vintage” fashion brand for young men, among the new private labels that will appeal to the chain’s customers. Both brands, he said, “feature a wide range of sizes reflecting our commitment to inclusive sizing.”
Target continues to look to its stores as the key piece in its focus on making shopping easier for its customers. Both its new smaller format as well as traditional big boxes, have been designed or remodeled to enable faster shopping trips.
Ninety percent of two-day home delivery orders go out from local stores, which also offer easy pickup with both in-store and curbside options. The Shipt same-day delivery business is expanding its geographical reach with plans to deliver all major product categories from Target’s stores next year.
DISCUSSION QUESTIONS: Which changes made at Target over the past two years have helped the most in leveling the playing field with major competitors such as Amazon and Walmart? What is your assessment of Target’s business prospects heading into the Christmas selling season?