Target CEO points to one-stop shopping as key to chain’s success

Discussion
Source: Target
Nov 24, 2020

Target continues to top the lists of major retailers thriving during the pandemic, even as many businesses struggle in an environment where customers are hesitant to spend much time in physical stores. CEO Brian Cornell recently pointed to one factor that has allowed Target to make the best out of an unprecedentedly bad situation — the fact that at Target you can buy most anything.

The retailer has been seeing a type of guest recently that shops all of its categories, Mr. Cornell told CNBC’s Squawkbox. He described the chain’s diverse product assortment as being especially important during the pandemic, since customers are attempting to limit the number of trips they make to stores. For example, Target has found parents with kids who are quickly outgrowing clothing visiting the store to buy private-label apparel, then moving to adult clothing sections and on to food and beverage.

Mr. Cornell’s statements come after Target posted outstanding third-quarter results with increases both in digital and physical sales. The chain saw online sales jump 155 percent and physical store sales increase 9.9 percent. The retailer’s pandemic-era success is also shared by its bigger rival, Walmart, which reported likewise impressive third quarter numbers, including a 6.4 percent gain in same-store sales.

While the Squawkbox interview touted the in-store experience as the basis for Target’s expectation-busting quarter, the chain has also been notably successful in its leveraging of delivery and curbside pickup/BOPIS, services that have become essential to customers during the novel coronavirus pandemic.

Even before the pandemic, Target was experiencing an uptick in the use of these services. Last Christmas season, the chain reported having prepared nearly five times the number of orders for curbside pickup than it had the previous year.

Target has been making significant investments in product lines as well as services, recently announcing it would be adding 600 new SKUs to its Good & Gather grocery brand. The line has drawn sales of $1 billion since its launch in September of 2019.

The chain has also promoted itself as a safe place to shop during the pandemic, introducing measures during the holidays meant to allow customers to move through the store faster.

DISCUSSION QUESTIONS: Do you agree that one-stop shopping is the key to Target’s recent success and will it remain so after the threat from COVID-19 diminishes?  Should more specialty retailers broaden their mix to try and compete with chains like Target or would that, in most cases, be a mistake?

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Braintrust
"Target should not do itself a disservice and place all the credit on underlying trends. The fact is that a lot of consumers love visiting Target stores. "
"If they keep innovating and focusing on customer experience, I believe their success will continue long after this pandemic."
"Are the Targets and Walmarts of this world taking over what used to be the domain of the department store?"

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26 Comments on "Target CEO points to one-stop shopping as key to chain’s success"


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Mark Ryski
BrainTrust

Target has set out to be the easiest retailer to shop and their results reflect this. One-stop shopping is certainly part of the success formula, but it’s not just about offering one-stop shopping – Target is also easy to shop. Target, almost more than anyone else, has refined their in-store pick-up, buying online, curbside and delivery options and this is a big part of their success. Broadening a product mix alone won’t magically drive sales unless you can execute, and that’s what Target does above all else.

Neil Saunders
BrainTrust

Consumers have consolidated their physical shopping trips during the pandemic. This is because of health concerns, but also because we are all moving around less and so not shopping on-the-go across a fragmented number of retailers as much. This dynamic inevitably benefits the big-box general merchants like Target and Walmart – particularly as they carry groceries.

However Target should not do itself a disservice and place all the credit on underlying trends. The fact is that a lot of consumers love visiting Target stores. And those same stores sell a lot of stuff people want to buy. Both things are the product of a clear vision, major investments, an excellent team, and a relentless focus on the customer. Target’s success didn’t just fall into its lap. It earned every cent and percentage point of its growth.

Dick Seesel
BrainTrust

Target’s footprint in groceries and commodities allowed it to stay open when many other retailers closed their doors. As I said last week when Target reported its earnings, its apparel and soft home businesses were able to thrive while competitors like Kohl’s were limited to e-commerce sales. So, it’s clear that Target’s variety of categories and tight assortments are part of its winning formula.

That being said, Target worked since Mr. Cornell’s hiring on upgrading those assortments (especially in apparel) and had been gaining share even before the pandemic. Combine this with the “easy shopping” messaging and execution, and it’s no wonder Target is emerging from 2020 stronger than ever.

David Naumann
BrainTrust
David Naumann
Marketing Strategy Lead - Retail, Travel & Distribution, Verizon
10 months 27 days ago

One-stop shopping is a new habit that many consumers adopted during the pandemic when many non-essential stores were closed. Consumers realized that some products they purchased elsewhere could be purchased at big discount stores like Walmart and Target. More people began to realize that basic clothing, electronics, and much of their groceries can be obtained at these chains and it was good enough. I think one-stop-shopping will be a habit that will continue for many shoppers, especially those that have busy schedules and value convenience. Mega discount and even upscale stores have been very popular in Europe for many years and now it has evolved in the U.S.

Suresh Chaganti
BrainTrust

Early on, allowing only essential retailers to stay open significantly crippled retailers such as J.C. Penney and Macy’s. Of course they were not doing well even before pandemic and the pandemic only accelerated the fall. But it irrevocably altered the competitive space. The shoppers to most of the specialty stores are now moving to Walmart/Target. When lockdowns return it will only strengthen Target. Of course Target continues to invest and widen the gap with the competition.

Specialty stores have a tough road ahead. They lost sales during lockdowns and may have also lost those customers forever. Innovation is required, but lack of ability to invest will hamper the growth.

Michael La Kier
BrainTrust

Just when you think Target is on a roll — their CEO claims their success is due to “one-stop shopping”? C’mon. If that’s the case, Amazon and Walmart will win as they offer better selection and (mostly) better pricing. If other retailers heed Target’s advice and expand their assortment it will be a losing strategy. Target’s recent success is due to multiple factors: pre-pandemic emphasis on digital options, ability to pivot in an agile manner, and most likely a loyal shopper base because of Target’s unique assortment and good pricing.

Dave Bruno
BrainTrust

A broad product range is certainly an important part of Target’s success, but the best assortment is only as good as the brand’s ability to execute the shopper experience. And when it comes to executing experiences, Target has absolutely nailed it. They offer efficient, flexible and safe options for all shoppers, from online to inside the store to the curb. Assortment draws interest, execution draws repeat business…

Brandon Rael
BrainTrust

Well before the COVID-19 pandemic emerged, Target was already well on its evolutionary path to becoming a one-stop-shop for all consumer needs. Consumers were already accustomed to consolidating their shopping trips, especially with everyone balancing work and life needs. Since COVID-19 impacted our lives, there are health and safety concerns that help position Target as the retailer of choice to get all of our essentials.

While Target’s digital-first operating model may seem revolutionary, their strategy is very similar to what Sears, Kmart, and other legacy retailers did to enable consumers to find all their needs in one store. The differentiators are the efficiency, value via Target’s private-label offerings, digital-first approach, and loyalty integration.

Target has proven to be extremely resilient and adaptive with its flexible and scalable digital-first model. This sustainable approach will resonate with consumers well beyond the pandemic period.

Gary Sankary
BrainTrust

It’s a combination of things, including one-stop shopping. Target has been investing heavily in digital commerce since Brian Cornell came on board. To be honest they had ground to make up. They also have invested in store remodels to make the stores easier to shop, easier to check out, and they’ve really focused assortments in key categories. The challenges before the pandemic were how to grow digital commerce and how to get more of their guests to diversify their baskets — getting the grocery-only shopper to add general merchandise, for example. The pandemic has put wind in the sails for those initiatives. Add in their ongoing commitment to team and customer safety and they have hit a home run.

Lisa Goller
BrainTrust

Minimizing store visits as an omnichannel one-stop shop helps consumers access essentials and mitigate health risks. Investing in a robust assortment, including private label grocery, has inspired Target shoppers to fill their carts.

As a one-stop shop, Target will still earn loyalty after the pandemic for its convenience, time savings and quality.

Broad category management boosts complexity, so specialty retailers seeking to compete with Target face steep barriers to entry. Dominating a niche makes more strategic sense for them.

Chuck Ehredt
BrainTrust

Target´s results are because they are well-run but also, importantly, because they offer a marketplace where customers can most easily resolve their own needs. Commerce over millennia has evolved from individual stands selling few products, to souks and bazaars, to shopping malls, to giant e-commerce platforms — as the most successful businesses find ways to expose their wares where the customer shops.

Customers flock to marketplaces where they have choice – and Target delivers that in a comfortable environment where customers have felt relatively safe during the pandemic.

Of course we can´t have dozens of retail brands copying the same marketplace model, so for most they need different strategies to stand out. But learning how to co-exist in growing marketplaces will be one of the fundamental objectives of many businesses during the next two to five years.

Brands that don´t own the marketplace or sales channel need to find ways to stand out among the noise, while optimizing the competitive environment for their self interest.

Paula Rosenblum
BrainTrust

Yes, the world has changed. While before the pandemic there was a trend toward targeted (sorry — no pun intended) shopping trips, getting in and out, and doing it quickly in one place is now a happening thing again. I expect it to continue for some time.

Also the fragile state of personal economic conditions will keep customers trading down for some time.

Dave Wendland
BrainTrust

Target has gotten it right in MANY ways. I don’t think they will slow down their innovation, their commitment to the consumer experience, integration of omni-present options, and delivery of consistent prices and quality. Not every retailer can navigate such a balance — but Target has raised the bar.

Zel Bianco
BrainTrust

I would say they are getting closer to that goal, but unless they figure out produce, meats and fish, they will not get there. I don’t see buying those categories at Target anytime soon.

Richard J. George, Ph.D.
BrainTrust

Long term retail success is predicated on offering an omnichannel experience. Such an experience is not about channels, it’s about customers. Despite the recent surge in COVID-19 cases, people still are willing to venture into brick-and-mortar stores. Target has done a good job of creating a safe and inviting store environment. Online will continue to grow for Target and others. The key is the optimization of stores. For a number of reasons (pandemic fatigue, low consumer debt, etc.) analysts predict a robust holiday shopping season. Target is prepared.

Mohamed Amer
BrainTrust

Specialty retailers should not broaden their mix to compete with chains like Target. That is the fastest route to insolvency: competing on the dominant player’s strength. Instead, they should establish credibility in their niche, go deep, and add service elements to differentiate further. Use data to craft higher engagements and launch or enhance cutting edge data science-based loyalty programs.

As for Target, the company has been steadily shoring up its core strengths of merchandising, expanding grocery, and integrating online and offline shopping. The stores are bright, colorfully displayed, and the associates are helpful. So while the COVID-19 pandemic shifted purchase behavior to online and consolidated physical store visits, the brand’s underlying strengths allowed it to outperform others.

Kathleen Fischer
BrainTrust

The current trend of one-stop shopping has definitely helped Target, as have BOPIS, curbside pickup and home delivery, but Target also has a loyal customer base who shop there based on assortment, services and ease of shopping.

Andrew Blatherwick
BrainTrust
Are the Targets and Walmarts of this world taking over what used to be the domain of the department store? It is interesting that at a time when department stores are finding it more difficult to find a space in customers’ hearts and more importantly shopping wallet, the hypermarkets selling food, apparel, household goods, etc. are doing particularly well. Clearly, food is the driver that brings in the customers who are then shopping for other items as they try to reduce the number of stores they visit. But why have the departments stores, many of which have food departments, not managed to replicate this success? Have they missed the “value” message that customers are looking for in these hard times or is it that Target and Walmart have made it easy to shop along with good online shopping as well? The older department store sites are typically older building on many floors and are not so easy to shop but that cannot explain the difference in performance. They just have the mix of merchandise and… Read more »
Ananda Chakravarty
BrainTrust

For Target, it’s more than just one-stop shopping – though that certainly helps. Target’s reputation as a clean store is just as important in current times. The pandemic has brought out fear of smaller establishments that might not have a strong reputation for cleanliness, bright lighting, associates cleaning registers and carts after each use and precautions to keep customers safe. One-stop shopping also plays into the equation, but only after the customer enters the store increasing wallet share of a loyal customer base. No clue what will happen after COVID-19, but that’s some time away.

Unless retailers have a similar business and a wide assortment, it would be challenging for them to match Target. People forget retail is rarely a copycat business – each retailer is unique. Target’s size, culture, customer focus, store format, assortment and policies make them successful during trying times.

Ricardo Belmar
BrainTrust
Target has three main factors generating its success: One-stop-shopping: Target is truly the modern department store. While I would not say Target has become the “everything store” (a moniker I’d reserve for Amazon and Walmart), they do have a department to cover almost any area a customer wants to shop and, during the pandemic, customers want to minimize the number of shopping trips and the number of stores they visit in one trip. Products customers need and want, starting with grocery (the need), to apparel and electronics (some needs, some wants), and many other departments in-between (kitchen/housewares, home furnishings). Customers not only find what they need at Target, but they also find products they love and want to own. It’s a testament to the quality and desirability of the private label lines Target has created that consumers enjoy buying them so much. Convenience. Target has fulfilled its promise to be the easiest place to shop. Starting with top of the funnel search and filters (you can choose fulfillment options at the top of the search… Read more »
Gene Detroyer
BrainTrust

Convenience for the shopper has been the byword in retail. The only thing the pandemic has changed is that it has put the concept on steroids. It won’t go away.

Ken Morris
BrainTrust

Target has implemented a number of customer focused digital engagement initiatives that are complementary to their one-stop shopping journey. By adding these initiatives to their existing “essential” status they have made themselves, in my opinion, the leading customer experience big box retailer in the country.

Lauren Goldberg
BrainTrust

One stop shopping is surely helping Target, but that’s not the only reason they are excelling right now. They have created a great shopping experience, from the private brand merchandise, to the renovated store layouts, to the fulfillment options. If they keep innovating and focusing on customer experience, I believe their success will continue long after this pandemic.

Kenneth Leung
BrainTrust

One stop shopping with pharmacy/cleaning plus food items is what drives me to Target right now, especially the downtown location that I can walk to. Great shopping experience inside and well lit and laid out, plus signboards telling you what is out of stock (used to be cleaning supplies, now it is gaming systems, LOL).

Shep Hyken
BrainTrust

In the COVID-19 crisis, minimal shopping was/is appreciated by consumers. Being able to get almost everything they want is exactly what consumers wanted. Target didn’t change their model to accommodate this need. Retailers thinking of making a change to compete with Target should recognize that the fear of health and safety could be substantially reduced after a vaccine. Long-term changes based on temporary problems need to be thought out.

Xavier Lederer
BrainTrust

The pandemic had a weird impact on marketing fundamentals: since one-stop shopping brands (e.g. Amazon, Walmart, Target) have grown successfully, it can create the feeling that “offering everything to everyone” is the right approach. Other brands like Sears have tried this before, and were eventually bypassed by newer, more focused brands that better met the needs of their specific target group. A clear brand promise that solves a key problem of a well-defined core customer will remain fundamental to business success.

wpDiscuz
Braintrust
"Target should not do itself a disservice and place all the credit on underlying trends. The fact is that a lot of consumers love visiting Target stores. "
"If they keep innovating and focusing on customer experience, I believe their success will continue long after this pandemic."
"Are the Targets and Walmarts of this world taking over what used to be the domain of the department store?"

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