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Are Target’s skyrocketing online sales retail’s new normal?

April 27, 2020Written by Tom Ryan

Photo: Target

In a financial update last week, Target detailed how its online sales accelerated and in-store sales softened as the coronavirus pandemic raced across the country. Comp sales for the quarter-to-date have grown over seven percent with more than 100 percent growth in digital channels offsetting a slight decline in stores. According to the monthly pattern:

February: Total comps increased 3.8 percent with strength across categories. Late in the month, traffic and comps at both stores and online channels picked up as stockpiling began.
March: An “even stronger surge” in traffic and sales occurred mid-March with the mix becoming heavily concentrated in essentials and food and beverage categories. With of shelter-in-place orders arriving later in the month, “trends in stores softened significantly while digital sales accelerated dramatically.”
April: Early sales were similar to late March but “improved meaningfully” beginning April 15. Through April 23, comps increased more than five percent as a more than 275 percent hike in online comps offset a decline in the mid-teens at stores.

"Consumer behaviors continue to change dramatically, particularly as public health officials have told Americans to minimize their time in stores," Target CEO Brian Cornell told reporters. At the store level, the volume of order pickup during some weeks in April was up to seven times greater than normal. Some single days have been twice as high as Cyber Monday. On the Friday before Easter, Shipt, its same-day delivery service, did more volume than it typically does in a week. In-store sales appear to be declining as the chain deals with restrictions on the number of shoppers and consumers’ increasing apprehension about going out in public. Mr. Cornell believes, however, that consumers seeking to reduce their outings will continue to come to Target’s locations for one-stop shopping and same-day pickup. Keeping stores operating also speeds online fulfillment, he said. Target’s performance comes as surveys and retail traffic in recovering countries overseas indicates U.S. consumers will cautiously return to stores as restrictions ease. The retailer also warned that higher labor costs, the sale of more low-margin items and write-downs of inventory in apparel and accessories would lead to slightly lower profits in the first quarter.

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