2019 Retail Pacesetters: Target focuses on efficiencies, acquisitions

Target officials fully expected 2018 to be a transition year for the company as it worked to improve efficiencies across its supply chain, including investing in technology to support back-office operations, revisiting pricing and repositioning its store brand offerings. Instead, it turned out to be one of the most productive years in Target’s history. Not only was foot traffic in its stores up, online sales for the Minneapolis-based company were among the strongest they had ever been.

Looking to become America’s easiest place to shop, it’s clear that many of Target’s initiatives are helping the chain achieve that goal within its 1800-plus stores and online. With the addition of Vermont in 2018, Target now operates in all 50 states.

Its recently acquired Shipt shopper delivery service has been met with rave reviews as it allows consumers to have groceries delivered to their homes or picked up at the store without the need to get out of their car. Target’s move to remodel more than 1,000 stores also is receiving positive feedback from customers who appreciate how much easier it is to navigate the aisles. The steady stream of new brand launches has been an effective tool to keep interest and excitement high as well.

From a supply chain perspective, the company will be continuing its focus on improving cost efficiencies and filling orders faster and more reliably.

At Target’s annual financial meeting, chairman and CEO Brian Cornell said the company plans to continue investing in new own-brand launches, including its new premium wine label, The Collection, an assortment of California wines selling for less than $10 a bottle. According to Cornell, Target will be introducing another wine brand this spring as a result of its collaboration with Vineyard Vines. These new additions will join the chains’ existing own-brand wine options, Wine Cube and California Roots.

The company also introduced three intimate and sleepwear brands in recent months. In February, Target brought women’s body care brand Flamingo — from the creators of the Harry’s line of men’s grooming products — to its shelves, touting its focus on digitally native brands. For all these reasons, analysts are bullish about Target’s future. They said the chain’s commitment to raise its starting wage to $15 by the end of 2020 is yet another move in the right direction.

Amanda Lai, senior consulting associate at McMillanDoolittle in Chicago, said Target has been working hard to stay relevant in the minds of consumers, including investing in the look of its stores and store brands. Creating such destination categories as fashion, beauty, home, toys, and children and baby, she said, also has made a difference. “These key categories highly resonate with the needs and lifestyles of its customers, differentiate the retailer from Walmart and others, and have given guests a reason to continually shop at Target,” Lai said.

Target’s willingness to spend money on technology, grow the number of fulfillment options it offers customers, and move into untapped markets by building small-format stores in urban neighborhoods and college campuses also are solid investments, Lai said.

Understanding what its shoppers want next and delivering on that positions Target for long-term success. “Target has blended the best of physical and digital shopping by investing in services across its physical, digital, mobile and omnichannel platforms,” Lai said. “Formerly online-only brands, such as Casper, Harry’s, Quip and BarkBox are now available at Target stores and are easily recognized by the retailer’s digitally connected consumers.”