In a meeting with analysts Wednesday, Target executives outlined major changes in store and omnichannel strategies aimed at providing a customer-centric experience via improved app capabilities, ship-from-store fulfillment, better inventory control, and a more compelling in-store experience.
Stores are being revamped to highlight more appealing merchandise in more appealing ways, they said. The retailer is focusing especially on its home, beauty, and apparel assortments, and, in grocery, more organic products, fresh produce, and fewer concentration in middle-of-the-store dry goods.
Target is aiming to increase sales by 1.5% to 2.5% this year and by at least 3% annually in 2017, at the same time cutting costs by trimming technology spending and the improving supply chain logistics.
CEO Brian Cornell, who came aboard in 2014 after the retailer’s mammoth 2013 holiday-time data breach, seems to be having a real impact.
His focus on key categories looks to be quite effective, and the company’s Q4 34% e-commerce growth is notable, especially when compared to Wal-Mart’s more tepid 8% e-commerce growth in the same period. Cornell's efforts to attract more customers to stores, which includes ramping up its displays and clothing selection as well as push in-store pickup for online orders, seems to be paying off, and the retailer now says its doubling down on those efforts.
Target, as a much smaller retailer than Wal-Mart chasing many of the same shoppers, doesn’t have Wal-Mart’s immense buying power and is less able to compete on price against Wal-Mart or Amazon. It’s penchant for differentiating itself through fresh designs—designer collaborations were first forged by Target decades ago—and a premium merchandise assortment had been key to that, and the retailer seems to be getting that mojo back under Cornell.
Target recently released a new line of gender-neutral decor for kids, and has been focusing on key grocery departments in an effort to attract more millennial customers. The latter strategy is similar to Wal-Mart, which has also made revamping its grocery offerings a priority. And Wednesday Target announced that its next design collaboration would be with perennially appealing Finnish design company Marimekko.
Though it previously said that it wasn’t suffering the inventory glut felt by other retailers going into the holidays, the retailer said Wednesday it would be changing up its merchandise mix to help with its out-of-stocks problems. The company recently hired former Amazon VP of operations Arthur Valdez to revamp its supply chain logistics.
These days it also has vastly more nimble technology to help its inventory and personalization efforts, and avoid any further data mishaps. In the call, it was clear that the retailer aims to be an all-around retailer with great appeal.
"This isn’t a stop and go pick up some food," COO John Mulligan told analysts. "It’s really about bringing the totality of Target to that neighborhood."