Photo: RetailWire
More Americans are making Target runs
A lot of Americans are going on Target runs.
The retailer saw shopper traffic improve 6.2 percent during the just completed holiday season, according to Placer.ai, even as other major retailers like Best Buy and Walmart experienced footfall declines.
Store traffic for the chain, as reported by Reuters, was up across the board with the exception of Hawaii and Washington, D.C..
The store traffic numbers themselves don’t tell the whole story as COVID-19, first with the Delta variant and then Omicron, affected consumer behavior and convinced many to shop online.
Past performance suggests that Target is likely to report strong numbers for the current quarter when it reports next month. The chain has consistently registered traffic growth both in stores and online in recent years.
Target reported a 12.7 percent gain in same-store sales last quarter, on top of a nearly 21 percent increase during the same period in 2020.
CEO Brian Cornell cited increased customer traffic as the key factor on the company’s earnings call in November.
“Store sales were the primary growth driver this quarter, while same-day services propelled our digital growth. Since the third quarter of 2019, prior to the pandemic, Q3 store sales have expanded by $3.8 billion, while digital sales have increased another $3.1 billion,” he said. “This provides a vivid demonstration of the flexibility of our operating model to serve our guests no matter how they choose to shop.”
Mr. Cornell, who is slated to give a keynote address next week at the National Retail Federation’s conference in New York, emphasized the contribution of Target’s team members as the key to the chain’s success in an interview with the Minneapolis Star Tribune.
“What underscores our success over the last four, five, six years is that commitment to team and recognizing that from a consumer and guest standpoint that human touch is still important,” he said. “They like coming into our stores and interacting with our team members.”
Target’s success is directly tied to its stores. Mr. Cornell pointed to the 2017 decision to shift fulfillment of online orders from warehouses to store locations.
“It was not well received. It was a big bet,” he said of the decision. “The convenience and ease it was going to offer, to me, that was the vision of the future that our team understood because they had been talking to consumers and talking to our guests.”
Discussion Questions
DISCUSSION QUESTIONS: What do you think is convincing consumers to make more Target runs? Where do you see the biggest opportunities for Target to further improve on its performance?
Poll
Loading …BrainTrust
Doug Garnett
President, Protonik
Shep Hyken
Chief Amazement Officer, Shepard Presentations, LLC
Target delivers a consistent, reliable store experience – period. Despite all the challenges, Target executes better than any other retailer, and shoppers are attracted by this. Target was way ahead of the market when it came to in-store pick-up and using their significant store network to facilitate online orders. These investments paid off and the pandemic amplified it all. As impressive as Target’s store traffic results are, equally important is their shopper conversion numbers – Target is not squandering their store traffic, they’re converting it into sales.
The reason for this is very simple to explain: Target makes itself a destination worth visiting. There is always something new to look at from brands to collaborations, there’s a great variety across many categories (Target is a true department store in a way that traditional department stores are not), stores are nicely merchandised and a pleasure to shop, customer service and the in-store energy is good, and there is strong value for money (important in a time of inflation). As I said, it’s simple to explain. but very difficult to get consistently right — which Target does.
Target, under Cornell’s leadership, pivoted early in the pandemic to stand up e-commerce capabilities through their app. BOPIS in particular has been especially strong. They also focused on their supply chain to develop strategies to bypass some of the bottlenecks in the supply chain that have affected other retailers. These strategies complemented Target’s already strong merchandising and store execution to create a very compelling branded offer for consumers, and those consumers have rewarded them for their efforts.
One word: grocery. Target’s strategy of focusing on grocery to drive more traffic has paid off. Shoppers who are looking for an excuse to check out the latest apparel and home items at Target now have a valid, practical reason, Target has achieved “one-stop-shop” status. Target has mostly ironed out the out-of-stock problems that plagued its grocery business in the past and wisely revisited its private brand portfolio in food. Target’s decision to leave the pharmacy business, another traffic driver, to the experts via its tie-up with CVS has also helped its overall business.
Customers DO enjoy interacting with Target team members because they’re happy. Service is excellent. I’m lucky enough to have a Target and a Container Store nearby in the same building, and it’s a joy.
It’s simple: Target stores are spectacular.
Eye-catching assortments and brilliant shop-in-shop partnerships create an alluring oasis for consumers. Also, Mr. Cornell is bang-on in saying the “human touch” of helpful, upbeat associates keeps shoppers coming back.
To fuel growth, Target could be more aggressive in digital, including ads, and continue to expand its wildly popular private labels.
Target is still a target store. It keeps all the basics and isn’t about fluff. Clean, minimalistic decor, straightforward staffing who can help, and stocked shelves with fixed structure. Customers know what to expect entering a Target store, and they bolster this with a strong and convincing loyalty program that maintains consistency. Lastly, they’ve executed masterfully in location selection and customer engagement online and offline – maintaining a comprehensive grocery section that drives inherent and more regular traffic. Others have done the same, but Target has usually done it better. The in-store warehousing bet is paying off in spades on the back end and that slowly translates to availability and meeting customer expectations on the front end. Cornell and team have kept a consistent shopping experience that will continue to attract customers. They’ve done this without sacrificing their focus on digital engagement.
Target is simply a nice place to shop – good fundamental retailing. They have a great assortment, offered at fair prices, displayed in a welcoming, well organized way, and they run organized stores – especially critical during the pandemic.
Amid that, they have for decades used an approach with product which has featured goods which are highly attractive – even those not advertised. My only surprise is that they’ve been able to maintain good stores despite also chasing (in publicity) many of the e-commerce shiny baubles.
Long before COVID-19, Target doubled down on investing in their stores with improved layouts, brand partnerships, community-centric locations and blending online and offline customer experiences. Instead of designing their stores around e-commerce, they followed the shopper’s journey and designed e-commerce around their stores. The results have paid off with dramatic increases in loyalty, basket size and repeat business. While other retailers, including Walmart, are still focused on ways to offer faster home delivery, Target focused on the in-store experience. Considering that, despite pandemic fears, over 80 percent of total retail revenue still happens through brick-and-mortar, Target’s popularity is largely due to the fact that they are committed to giving customers a thoughtfully curated pool of house brands that resonate, partnerships with popular retailers like Ulta and Disney, and a store environment that’s enjoyable to spend time within – exactly what the shopper wants most.
And thanks to their acquisition of Shipt, Target leapfrogged Walmart’s drive for home delivery. Shipt keeps getting better itself and is reason #1 why my mother-in-law has been able to live independently.
Target executes “omnichannel” better than any other retailer, but the real secret of its success under Mr. Cornell is simple: Content, content, content. When the focus shifted back to apparel and soft home — instead of food and consumables — the company regained its credibility in the businesses that made Target great in the first place.
Target stores are clean, have neat displays and relevant merchandising. BOPIS shoppers and regular shoppers are both prevalent in the stores, and they have upped their advertising game through TV, newspaper, and digital means. Why not go to Target?
Target has spent years perfecting their store formula for success. It’s grounded in spectacular store look/feel (regardless of what state, city, county you’re in), exciting new and differentiated brand partnerships that have morphed into their “store-within-a-store” strategy, happy store associates who want to help you, and timely checkout. Assortment of new and exciting products gets a huge gold star and no one has done a better job than Target, which is why their numbers are incredible.
Target committed billions of dollars to store remodels starting in 2018 and it’s paying off. The classic example of what NOT to do was Sears, putting no effort towards stores whatsoever, and we all know how that ended. Another reason could be their local stores, where it’s easier and more convenient to shop, especially with work from home being so prevalent. Good foresight, that’s the simple answer. Credit goes entirely to their strategic thinking.
Wide assortments that include grocery and compelling private labels combined with highly reliable execution of each interaction make Target a compelling destination.
Target is not trying to be Walmart anymore.
Target gets all the fundamentals of retail right. Assortment, availability and, above all, they are meeting their goal of being the easiest place to shop. Whether online of in-store, however the customer wants to buy and receive products, Target can do it. And they do it well! They have become the new modern department store, which consumers treat as a one-stop shop for many product categories. Add to that their widely successful private labels, both in grocery and apparel, and a reliable execution across channels, you have a winning formula that meets the customer where they want and how they want!
Mr. Cornell references the past four to six years as the cornerstone of Target’s success. While I think that’s true, I think it’s the work of the past two decades that made their emerging dominance over the past four to six years possible. Mall-based department stores kept shrinking their product offering, to become, arguably, over-assorted in apparel. All in the name of expanding gross margin percentage. Target kept building and reinforcing real breadth of product offering to become probably the most efficient shopping stop a household can make. Apparel, home, grocery, pharmacy and electronics all under one roof. Plus Starbucks! Great product, including well thought through differentiating private label. Great shopping and service. Great response to all the shopping and execution details demanded by the pandemic. They checked all the boxes with more skill and dedication than most retailers checked a couple of the boxes with.
Occam’s Razor teaches us that the simplest explanation is the best explanation so, applying that maxim, I’d say consumers are making more Target runs because they like shopping at Target. The reasons behind that are pretty obvious – selection, price, service, store “shopability,” etc. Target is just doing lots of things right, or at least better than their competition. And the best way for Target to improve is to continue doing what it does best – knowing their customer and giving them what they want.
Target put the consumer at the center and went from there. They have won a place in customer hearts but supports that with great utility. Leading store experience, strong omni, right assortment, right value, they made health and safety a huge priority (especially at the beginning of the pandemic) and shoppers can use them as a single destination, minimizing the number of trips while still having an enjoyable experience.
Target solves shopper problems with a superior value because it knows its customer and it is committed to the customer. The most complete selling model is having all aspects designed to surprise and delight, and exceed shopper expectations — all the while making money.
Target is clean, well-organized, offers a great value, and has excellent customer service. All retailers should follow their example and it will lead them to success!
A Target run can meet multiple consumer needs, from groceries to clothing, to office supplies, etc. It’s as close to a “one stop shop” as anywhere. There are few competitors that can offer as much. While Target can’t be everything to everybody, they can be everything for some.
Target’s ability to be a “one stop shop” for consumers, with reasonable prices and some customer service, has made the difference for consumers during the holiday season. While the stores continue to have limited staffing relative to their size, the improvement of curbside delivery and strong store associate training for the associates who are there has clearly made a difference. In addition, the grocery section drives store traffic and leads to increased market basket with non-grocery items as well.
Target must constantly balance assortment and design versus the high profitability and improved availability of store brands. Target has leaned heavily on store brands (easy accessible products for the broad range of appeal) with limited and very specific branded items in each category. That is the tight rope that Target must balance going forward to drive future growth.
Admittedly, I have been guilty of making runs to Target; and did them well before the pandemic made them more a necessity. But ways to get me, and others (who aren’t already doing so), to make more frequent treks? Honestly, I don’t think they should add anything. Because doing so will, in effect, turn them from “just enough” to “too much.” Excess is a consistent killer of success. Just look at brands and retailers that grew so big they ended up deflating.
Also, adding might mean expanding in ways that might suddenly make them known more for this rather than that. Which is not Target. They’re about being the “same” in practically everything. Consequently, generic and “branded” at the same time. A perfect personality-lite combination.
Meanwhile, I still don’t (and, likely, won’t ever) buy things from them in certain categories. But to get me to consider it would have them become more refined retailers. However, doing so is folly, because “wants” are fickle and fleeting in those areas, and Target is too smart to play that game.
Since it shouldn’t be about add, it could be about enhance. Twice I went to them, pre-holiday, to buy gifts that their website said a certain location had—but did not. Make that more accurate, please (because the tech for greater accuracy exits)! Also, staff may be helpful, but they are strikingly hard to find (and it was this way long before Covid created more absence). Here is a good place to help customers find their own way—with some self-serve information stations.
Yes, make it easier to run in—get just what you came for—and run out! That’s the way Target should go—and grow!
Consumers are feeling more confident in going into stores. I’m not surprised that Target is a beneficiary, given their superior merchandise and service levels.
As consumers are becoming more digital savvy, they want convenience and speed in all aspects of their shopping experience. Customers also want all product-related information in their hands. This is what Target truly excels at. Their self-help digital query resolution system enables faster communication and reduces query-response time. This level of sophistication in customer interactions keeps customers coming back for more. And I believe this is one of the primary reasons for Target’s success in attracting customers to their stores.
Target’s journey to omnichannel is inspiring. Retailers across the industry can learn a lot to help them advance in their omnichannel journeys. We, as retail experts rely on half-baked data and analysis to draw conclusions. So I feel it wouldn’t be right to tell them how to improve their performance. If given the opportunity, I’d rather they educate retailers and retail experts on how to do our jobs better.