Insights

Target Digs Deep For Long-Term Gains, Q1 Report Shows

GENERIC-LOCK

Good news for Target fans. The retailer reported a 3% increase in store traffic during Q1 of 2018 (its strongest quarter in ten years), showing that their recent investment in digital fulfillment and store improvements is resonating with customers. Looking back, Target has knuckled down in early 2018, focusing on brand selection; 56 store remodels; in-store pickup (Target Drive Up) for digital orders at 250 locations; and launching same-day delivery. In short, Target has committed to investments in customer experience.

Although an additional cost to these strategic investments is a slight dent in shareholder profit, the increase in overall revenue and long-term trajectory offers a positive outlook. The truth is that infrastructure and processes are expensive at this scale, but the company is focused on the big picture, according to Target CEO Brian Cornell, who said they’d “made significant progress in support of our long-term strategic initiatives.”

“Our customer data show that customer satisfaction at refurbished and newer stores is running significantly higher than at older units,” said Neil Saunders, managing director of GlobalData Retail, said to Retail Dive, commenting on Target’s earnings report. “There is no doubt that investing in stores was an expensive decision, but we believe these numbers show it was the right move to make.”

The news also follows mild speculation about an Amazon buy-out earlier in the year – a rumor that has since fizzled out (for the most part). Our main takeaway goes back to a point that was made at both ShopTalk: digital and physical efforts should revolve around how well you understand your customer needs. For Target and its loyal customers, that need is bridging the gap between digital orders and in-store pickup, and ramping up operational capabilities to compete with Amazon.