Target CEO: Success built on ‘great physical assets’ and ‘digital interaction’
Target CEO Brian Cornell headed into the 2017 Christmas selling season confident that the company’s stores were “better prepared” to meet the demands of consumers than ever before. Target as it turns out posted a 3.4 percent increase in same-store sales during the holidays and continued a trend of improving comps for the year, and so it appears Mr. Cornell’s optimism was not misplaced.
On the company’s third quarter earnings call in November, which was ahead of Target’s announced acquisition of Shipt, Mr. Cornell pointed to a number of steps Target has taken to build traffic and sales momentum in its stores and online. Among these were the introduction of popular new private labels, lower everyday prices, store remodels, the rollout of new smaller stores, expansion of ship-from-store services, employee pay and training initiatives, curbside and in-store pickup as well as same-day delivery. Mr. Cornell also pointed to the efforts the company has made to revamp its supply chain as key to its performance.
Target’s CEO visited CNBC’s “Squawk Box” ahead of next week’s earnings report. Mr. Cornell pointed to positive growth in all the chain’s major categories and across all geographies as reasons for continued optimism. While a lot of attention has been paid to Target’s online performance — the retailer has had four years of positive comps — Mr. Cornell pointed out that the combination of physical stores and digital operations is driving the chain’s recent success.
“We continue to see great traction in both our physical and digital performance. It’s a blend of both and I think the winning retailers in the future are going to combine a great physical asset and physical experience with the ease that comes along with that digital interaction. … We want to make it really easy to shop at Target,” he said.
Asked about the Shipt same-day delivery acquisition, Mr. Cornell said it was “only one of the tools” that Target is employing to upgrade its consumer fulfillment capabilities. He pointed to standard home delivery of online orders, a planned expansion to other markets of a drive-up service test conducted in Minneapolis and the use of the transportation tech company, Grand Junction, in New York City to enable shoppers buying in stores to have their purchases delivered.
- Target CEO: Online shopping alone won’t cut it, retailers also need great stores – CNBC
- Target Q3 2017 Results (Earnings Call Transcript) – Seeking Alpha
- Target to make same-day delivery push with Shipt acquisition – RetailWire
DISCUSSION QUESTIONS: What elements of Target’s strategy give you the greatest cause for hope or concern about the retailer’s prospects going forward? Do you see the chain’s best opportunities for growth being organic or should Target make further acquisitions in light of moves being made by Amazon, Walmart and others?