Is Target ready for Amazon and Walmart this holiday season?

Photo: Target
Oct 05, 2018
George Anderson

In August, Target reported that its quarterly same-store sales had grown to a 13-year high. CEO Brian Cornell credited Target’s “enhanced and differentiated shopping experience” as being the prime mover behind strong increases in traffic and sales at the chain’s stores and Heading into the Christmas selling season, Target is feeling good about its prospects as the retailer has regained its “cheap chic” mojo while giving consumers a variety of reasons to believe it is “America’s easiest place to shop.” 

The changes management has made in recent years has put Target in a favorable position to compete against all comers, including Walmart and, Stacey Widlitz, president and chief international store hunter at SW Retail Advisors, told CNBC. 

“I think Target has a more differentiated product assortment than Walmart today,” Ms. Widlitz said. “They have the product to win, and now they are putting the tools in customers’ hands — like two-day shipping.” 

“Customers are now like: ‘Wait a minute. Target behaves like Amazon, and they have strong private label categories. Why would I not add some extra stuff in my basket?'” she said. 

Target has seen a turnaround in its own and exclusive brands over the past couple of years with strong sales from the Cat and Jack private label for kids, Goodfellow & Co. for men and others.  

The retailer introduced four new private labels in the second quarter with a focus on appealing to Millennial and Gen Z consumers.  

On Target’s second quarter earnings call, chief merchandising officer Mark Tritton pointed to Wild Fable, a new apparel and accessories brand for women, and Original Use, “a street meets vintage” fashion brand for young men, among the new private labels that will appeal to the chain’s customers. Both brands, he said, “feature a wide range of sizes reflecting our commitment to inclusive sizing.” 

Target continues to look to its stores as the key piece in its focus on making shopping easier for its customers. Both its new smaller format as well as traditional big boxes, have been designed or remodeled to enable faster shopping trips.

Ninety percent of two-day home delivery orders go out from local stores, which also offer easy pickup with both in-store and curbside options. The Shipt same-day delivery business is expanding its geographical reach with plans to deliver all major product categories from Target’s stores next year.

DISCUSSION QUESTIONS: Which changes made at Target over the past two years have helped the most in leveling the playing field with major competitors such as Amazon and Walmart? What is your assessment of Target’s business prospects heading into the Christmas selling season? 

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"Overall, it’s the private labels plus BOPIS and other online changes that have positioned them well to compete with Amazon and Walmart this holiday season."

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11 Comments on "Is Target ready for Amazon and Walmart this holiday season?"

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Min-Jee Hwang

Target’s private labels have been a great addition for the retailer over the years. The company pairs affordability, quality, and service, among other factors, to help them attract customers. Overall, it’s the private labels plus BOPIS and other online changes that have positioned them well to compete with Amazon and Walmart this holiday season.

Art Suriano

Target has not only managed to have great success, they did it the right way — which was figuring out how to have success using their stores. Target has listened to their customers, has experimented and has not been afraid to shift gears if something wasn’t working. However, all along, every move they made kept the store customer in mind. As a result, look at their success with comp store sales.

I have said it before, and I’ll repeat it, retailers need the in-store presence and the online presence. Too many retailers have been spending money and at times wasting dollars chasing the internet and home delivery without focusing on their most significant asset, their stores. Target is winning big because they understand the value of having stores and continue to figure out in this new world of technology and convenience how best to use them.

Neil Saunders

Target has put itself in a great position to capitalize on the strong consumer environment and, as such, it should be one of the clear winners this holiday.

There are two things that stand out. First, the development of strong own-brands. These help to differentiate Target and, to some extent, insulate it from price comparison. They have also increased customer traction among certain groups. Second, the effort put into refurbishing stores and developing new smaller formats. These have helped improve perceptions of the brand, lifted sales, and increased footfall.

Carol Spieckerman

Target’s expansion of convenience options and tightened shipping and delivery timelines are big steps in the right direction. Going into the holiday shopping season ensuring that click-and-collect processes are humming at the store level will be critical. Pickup areas should be dedicated to that purpose, clearly marked, easily accessed and efficiently-run. Target stores are still pretty big and often feature obscured sightlines and confusing, inconsistent layouts. In my experience, finding help on the floor is actually much easier at your average Walmart. At Target, store associates always seem to be near the front of the store. “Disperse and deploy” are the marching orders.

Gene Detroyer

At this point Amazon and Target are not in the same ballpark and Walmart’s recent moves with Jet are helping them pull away. Too little, too late for Target. They simply are not ubiquitous enough.

Jeff Sward

Every time I visit a Target lately I find a new category that speaks to me. While I still don’t understand dropping C9, their new Goodfellow brand in menswear is well done. Nothing fancy, just good product aimed at the heart of the bell curve. Exactly what it needed to be. And the in-store marketing is well done. Target is taking the extra steps in branding and execution to communicate with the customer. It’s not just “stuff” on racks. They are breaking a sweat in executing branded statements. Again, nothing fancy, but other retailers could be taking notes.

Dick Seesel

Target’s recent success stems from its decision to return to its roots (“cheap chic”), not from a decision to be cheaper or more broadly assorted than Amazon and Walmart. (It helps that the company has taken steps to execute its omnichannel initiatives more effectively at the same time.) Target has always been most successful when it is “comfortable in its own skin” and develops merchandise strategies that fit its brand position.

Ken Morris
Ken Morris
Retail industry thought leader
1 year 7 months ago
As evidenced by its impressive same-store sales growth, Target has made some very smart product and customer experience improvements in the past few years. Adding more private label apparel merchandise that has resonated with consumers has helped elevate its brand as more of a destination for apparel shopping. Target has also been very focused on making shopping easy, quick and convenient for its busy customers. While its improved BOPIS processes and two-day delivery options will definitely help, a lot of these capabilities are now table stakes. Another reason for the growth can be directly attributed to the urban, smaller-footprint store expansion. This move increases store traffic in locations that are accessible to more than just the suburban mainstay of the company. City pedestrian traffic and accessibility by mass transit is definitely fueling a lift as is the economy. A company that touts their new “inclusive sizing” vs. “plus sizes” will fair well in an economy where the unemployment rate is the lowest it has been in 49 years. Last holiday season, Target did a phenomenal… Read more »
Georganne Bender

The Target Syndrome – going in for one item and coming out with a cartload – stands, and apparently it’s happening online as well. Target’s business prospects heading into the holidays looks bright; the retailer is easy to shop on all platforms. Its private label apparel is well done, it’s cool to admit that what you are wearing is from Target – I’ve never heard anyone say that about Walmart.

Target’s marketing is fun, consistent, catchy and in line with the in-store experience. As a consumer, what’s not to like?

Cynthia Holcomb

Simple. Target has cool stuff! It’s easy to shop and easy to buy via accessible price points and size ranges. Young women’s apparel offerings remind me of days before basic key items took the place of original and fresh design, well-merchandised. The revamp of young men’s apparel if executed like women’s will invite a new generation of men to Target. The addition of Magnolia Market to home is another reason for a trip to Target. Christmas will be good for Target. Easy in and out enhanced by new customer-centric delivery options.

Shelley E. Kohan
Target has consistently been more of a fashion discount store than Walmart or Amazon, so comparing the private label brands would not make sense. Target has done a good job with collaborations and exclusive merchandise. In addition to what others have already contributed, from an operational perspective, Target has invested heavily on the back side of the business with infrastructure and technology which translates to seamless shopping in the front of house. For example, using vendor replenishment for staple items keeps Target in-stock of basic items. Or creating a significantly better experience at customer service desks by using technology to more easily transact returns (you don’t even need your receipt). The efforts on the supply chain side to improve efficiencies have made a great impact on right product, right store and right time. Amazon has already been doing this for years so Target is catching up to the level playing field. With that said, this holiday is showing signs of positive results across all retailers. First half of 2018 is up 5.4% in total retail… Read more »
"Overall, it’s the private labels plus BOPIS and other online changes that have positioned them well to compete with Amazon and Walmart this holiday season."

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