Did Target just become the easiest place to shop for Christmas?

Discussion
Photo: Target
Oct 24, 2018
George Anderson

Target has invested in building up its fulfillment network over the past couple of years and executives regularly talk about the chain’s goal of becoming the easiest place for consumers to shop in America. With the holiday season coming up fast, Target is doubling down on that positioning with the announcement that it will offer free two-day shipping on hundreds of thousands of items bought online with no minimum purchase required between Nov. 1 and Dec. 22.

Brian Cornell, CEO of Target, said free two-day shipping combined with other services — including Shipt same-day delivery in 46 states, Drive Up service in 1,000 stores, in-store pickup of online orders, and Target Restock and delivery from stores in Boston, Chicago, New York City, San Francisco and Washington, D.C. — gives his company an edge against all its rivals heading into Christmas.

“When you combine these services with our incredible assortment of exclusive brands, everyday low prices and skilled team, I’m confident Target will be America’s easiest and most enjoyable place to shop for the holidays and beyond,” Mr. Cornell said in a statement.

Target is heading into the holiday season on a sales roll. The retailer announced in August that its quarterly same-store sales had reached a 13-year high. Target has announced that it has more than doubled the number of new and exclusive toys it is carrying for the holidays and that it is expanding and remodeling space in 500 locations to make the experience

The chain’s shipping news follows an announcement this week that Walmart is expanding free two-day delivery to millions of items sold by third-party sellers on its marketplace.

DISCUSSION QUESTIONS: What do you see as Target’s advantages and areas of weakness heading into the holiday selling season? Will its free two-day offer with no minimum purchase help the retailer gain share of online sales for the last two months of the year?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"This is an excellent strategy for Target and shows that they are pulling out all the stops to continue their success. "
"If Target thinks this small effort is going to change the world, they have a lot of customer analysis to do."
"Someday in the future, this may be the moment we all remember as when the retail industry moved to a free shipping model permanently..."

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18 Comments on "Did Target just become the easiest place to shop for Christmas?"


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Art Suriano
Guest

This is an excellent strategy for Target and shows that they are pulling out all the stops to continue their success. The only concern is the free two-day shipping with no minimum on purchases. That could become very costly if Target finds themselves shipping orders of $20 or less. I do like two-day rather than same-day shipping because that gives Target a little more control of how they ship. I don’t think retailers have found the balance yet when it comes to delivery. Shipping is vital with online purchases, and no one wants to pay for it, but I don’t know that speed is the main issue as long as there is quality with the merchandise, competitive price and overall excellent service.

Ricardo Belmar
BrainTrust
Ricardo Belmar
Retail Transformation Thought Leader
2 years 22 hours ago

Great point about the shipping costs, but I have to believe Target looked at their purchase data and came to the conclusion that their average basket size would go up with free shipping and the risk of those small purchases was low. Otherwise, it’s a gamble!

Neil Saunders
BrainTrust

Target is on a roll, largely thanks to the improvement of ranges, the refurbishment of stores, and the investments in omnichannel. All of these things should allow it to have a good holiday season.

I think the free shipping initiative will help, although it might be somewhat blunted by other deals from rivals now that shipping has become the new battleground. However, for all retailers free shipping is unhelpful to margins and profits. I daresay some of this will be offset by elevated demand thanks to high consumer confidence and spending, but it’s another cost in a cocktail or rising costs that will hinder bottom line growth.

Phil Masiello
BrainTrust

Target should offer free two-day shipping year round. Free shipping is a motivator. If Target thinks this small effort is going to change the world, they have a lot of customer analysis to do.

Amazon has used Prime to build loyalty and retention. This is not a short-term program but a strategy. Target’s biggest weakness is a lack of understanding of the online customer. Yes there are some exclusive brands at Target, but I don’t think that is enough to create huge leaps in online usage.

Lee Peterson
BrainTrust

The easiest place to shop? That’s funny. The easiest store (with e-commerce) to shop, maybe. But the fact is, more than two-thirds of all consumers go to Amazon online FIRST to look for whatever it is they want. That’s the biggest hill to climb. Easier helps, but if consumers don’t even hit your site till they’re done shopping, it doesn’t matter.

Rich Kizer
BrainTrust

I feel like I’m getting double, no triple vision as a consumer, trying to figure out who is offering what in delivery and charges. But that is the playground in which every retailer is finding itself, and the challenge is to sell the fact that they do it better than the other (which could be difficult). This has become the mandatory ante in the game.

Brandon Rael
BrainTrust

Removing the friction from the shopping experience, offering free two-day shipping as well as a very compelling merchandising assortment has set up Target for a very successful 4th quarter holiday shopping season. While the company may suffer some margin losses with the free two-day shipping with no minimum on purchases, it will gain new customers and relationships, and that is far more valuable than anything in today’s hyper-competitive clicks to bricks retail environment.

While the free shipping is going to drive some interest, the challenge will be for Target to retain and build upon their positive sales growth momentum. Perhaps it’s time for the company to regain some of that magic the brand had when it revolutionized retail by adopting a “cheap and chic” strategy.

Mohamed Amer
BrainTrust
Mohamed Amer
Independent Board Member, Investor and Startup Advisor
2 years 1 day ago

Target’s biggest advantage is the executive team’s shift in mindset from online and services being adjuncts of store sales to one that takes full view of the shopping experience inclusive of new conveniences, fresh assortment, exclusive products and offers, integrated supply chain, trained associates and frictionless commerce points.

As we’ve seen in the past few days, the 2018 holiday selling season is ramping up as a breakout moment in retail. It will serve to further separate those committed to tap into retail’s new reality by executing on broad strategic fronts as well as on high-leverage points of differentiation. The winners of the upcoming holiday season will set the pace for the rest in 2019 and beyond.

Camille P. Schuster, PhD.
BrainTrust

Target has had trouble living up to its promises during the holiday season. Will consumers believe this promise? They may test the system with small orders first which could be expensive for Target. However, that could increase consumers’ confidence. If the system works as promised early and consumers begin using Target as frequently as expected, and especially the last few days before Christmas, Target needs to be ready to execute.

Adrian Weidmann
BrainTrust

The toy retail landscape is without Toys “R” Us this season and Target, with its free two-day shipping, will aggressively compete for this business. Target is already advertising toys that are exclusively available at Target. Target has been ramping up its seasonal workforce to mitigate and meet the omnichannel demand — from click and collect to delivery via Shipt — Target will have a great holiday season.

Ryan Mathews
BrainTrust

So … what’s wrong with the rest of the year? True, Amazon does charge for Prime, but they’ve managed to convince shoppers that there are additional benefits that justify the expenditure. You can debate that all day … and people do … but there is no denying that it is an effective strategy for reaching a fairly good consumer segment. So Target is positioning itself to be Amazon-lite — same full-bodied delivery options, (for a minute) with less than half the inventory selection. Will it help them? Sure, but the real question is how many incremental sales will it gain them versus how much are they spending against sales they would have had anyway. As always in retail, time will tell.

Ed Rosenbaum
BrainTrust

I find it amazing how all big box retailers think they have the most amazing products to choose from. When, in reality, most carry the same items, priced the same or nearly the same. Maybe Target has found the differentiator between them and Walmart with the free delivery and no minimum. The bigger obstacle and 800-pound gorilla in the woodshed is always going to be Amazon. Amazon is the first place we look when we go online to make a purchase. How is Target going to overcome the facts that the customer has already made the purchase before getting to their website?

Carol Spieckerman
BrainTrust

Although many of the ramp-ups described in the article have Target playing catch-up with Walmart and Amazon, Target still enjoys a brand loyalty advantage. Target loyalists want to shop at Target and have to dig deep to find reasons not to. That puts Target in an enviable position and its recent Smartly brand launch could be more significant than its apparel revamps at the end of the day as it has the potential to turn Target into a one-stop shop. Target’s disadvantage continues to be its not-so-convenient locations, out-of-stocks on essentials, and spotty sales help.

Jennifer McDermott
Guest

Target’s initiative to provide free two-day shipping with no minimum purchase certainly puts them at an advantage this holiday selling season. The thought of waiting in long lines, sifting through inventory and battling the crowds in store can be a deterrent for many shoppers, but it beats the shipping costs tacked onto online orders.

It will be interesting to see how Target fares with its sales after implementing this new initiative. I think it’s a great step to increase sales and offer more convenience to its shoppers this holiday season.

David Naumann
BrainTrust
David Naumann
Retail Industry Analyst
2 years 22 hours ago

Convenience is a big deal for consumers and Target is smart to “target” their strategy on busy customers by making shopping easy. Target continues to offer customers more options for shopping, buying and receiving their products – and consumers like options.

Free two-day shipping, without a REDcard or any membership fees, is a great way to attract more shoppers during the holiday season. The biggest challenge for Target is to break consumers habit of shopping Amazon first, as approximately 50% of consumers start their product shopping by searching Amazon.

Tony Orlando
BrainTrust

This is a very bold move for Target and as said, most folks use Amazon first, which is impossible to overcome. This is also a bottom line killer for them, and they know it. A $20 minimum is nothing, and consumers who are savvy know how to cherry pick items with little or no margin for Target.

I’m stunned at some of the decisions these large retailers make in order to grow market share, with little or no thought as to the bottom line, which after all is why we run a business. Thursday morning, the rest of the mega chains will either match this offer or beat it in order to keep their sales base. In the end, the consumer wins and profits will slide.

Ricardo Belmar
BrainTrust
Ricardo Belmar
Retail Transformation Thought Leader
2 years 21 hours ago

This is a bold move to gain customer mindshare and be that first destination holiday shoppers go to for their purchases this season. This should bring many new customers to Target and help offset any margin hits from having to eat the shipping costs. I suspect Target conducted a data analysis of their customer transactions to determine how much that risk is and decided it was worth it. For me, another risk is how other large retailers will respond. Will competitors see this as something they need to match for the holidays? If so, will the net result be that consumers will be trained to expect free shipping across the board for the holiday season in the future? Someday in the future, this may be the moment we all remember as when the retail industry moved to a free shipping model permanently to satisfy customer demand!

Shep Hyken
BrainTrust

Once again, it’s all about convenience. However, this is more than just a convenience strategy. Target is going head to head with Amazon and Walmart. They have to. No doubt this will create more business. I’m hoping they will continue this after the holiday season. Convenience is not seasonal. It’s all the time!

wpDiscuz
Braintrust
"This is an excellent strategy for Target and shows that they are pulling out all the stops to continue their success. "
"If Target thinks this small effort is going to change the world, they have a lot of customer analysis to do."
"Someday in the future, this may be the moment we all remember as when the retail industry moved to a free shipping model permanently..."

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