Will Target hit the bullseye or miss with its store remodeling plan?
Target turned in a record performance last year and has followed that up with a great and even better-than-expected start in 2021. The retailer has no plans to rest on its laurels, however, as evidenced by an update issued yesterday on its multi-year plan to renovate existing locations to improve the shopping experience (in-store and online) for its millions of customers.
Remodels involve creating a designated and expanded area for in-store pickup; wider aisles, new fixtures and improved lighting in beauty; and in-store branded shops from partners including Apple, Disney and Ulta Beauty.
Target COO John Mulligan said on the company’s first quarter earnings call last month that the company would complete 34 store remodels by the end of the second quarter and more than 100 others by the end of the year. He said that more than 100 Ulta in-store shops would be completed in the second half and that Apple shops would be opened in others, without specifying a number.
“We expect these remodeled stores will generate an incremental two percent to four percent sales growth in the year following completion, with another two percent incremental growth in the second year,” said Mr. Mulligan.
“Beyond the direct impact on sales, these transformations create an ideal platform for all of the merchandise innovations and service enhancements that we’ll launch over time,” he added.
Target CFO Michael Fiddelke said on the same call that the store remodels, combined with big investments the retailer is making in improving its supply chain, will “support both replenishment and fulfillment” from Target’s stores.
The chain, which fulfills almost all its online orders in stores, has seen significant growth in Shipt same-day delivery, in-store and curbside (Drive Up) pickup. It has managed this feat while growing in-store traffic, as well. The Drive Up service has achieved the fastest rate of growth and generates the highest net promoter score (NPS) of any service among Target’s customers.
The retailer is also looking to expand the number of its locations, keeping stores at the heart of everything it does. Target opened 30 new locations last year, 29 of which were its new small format stores, and plans to continue opening between 30 and 40 new locations going forward. The small stores are tailored to meet the needs of customers living and working in cities, college campuses and densely populated suburbs.
- Take a Look! Here’s How Our Latest Remodels Are Making Your Target Run Even Easier – Target
- Target (TGT) Q1 2021 Earnings Call Transcript – The Motley Fool
- Target Builds on Momentum, Announces 2021 Strategic Investments – Target
- What distinguished e-commerce winners and losers during the pandemic? – RetailWire
- Will Target and Walmart top 2020’s record results in 2021? – RetailWire
- Target CEO says record-setting 2020 was no ‘fluke’ – RetailWire
- Target looks to elevate its ship-from-store operations – RetailWire
DISCUSSION QUESTIONS: Will Target’s store remodeling plan put it ahead, in-step with or behind the curve when it comes to offering the retail shopping experience that American consumers want? What retailer is currently offering the most coherent single source shopping experience in the U.S.?