Will Target own the Christmas season as it moves past its inventory glut?

Discussion
Photo: RetailWire
Oct 21, 2022

Target CEO Brian Cornell is nothing but positive on the chain’s prospects for the 2022 holiday season.

Mr. Cornell spoke on Monday with Brian Sozzi at Yahoo Finance’s All Markets Summit and addressed Target’s approach to culling excess inventory through aggressive promotions that began in June.

“We put that inventory problem behind us,” he said. “And now we can focus on great execution, delighting our guests, getting ready for the big holiday season. So we were pretty decisive and said, we’re not going to just let this roll into the next quarter. We’ll deal with it up front. And now we’re excited that we’re ready to play for the holiday season.”

Mr. Cornell doesn’t expect talk of a recession to slow his company down as high employment levels help to offset inflation rates that are at decades high levels.

“Everyone’s talking about recession. And sitting here today, there’s different points of view. You talk to bank CEOs. Some gloom and doom. Others are saying really healthy consumer [spending]. What we’ve seen all year long is really healthy traffic and a guest that’s shopping in our stores and shopping online so that strength in traffic has been driving our business. We’ve delivered solid comps throughout this year. We expect that to continue over the balance of the holiday season.”

Mr. Cornell’s traffic assertion is backed by research from Placer.ai. Store traffic grew 3.2 percent year-over-year during the week of October 3-9, which included Target’s Deal Days sales promotion to kick off the holiday season. Traffic growth for the week was double the year-over-year gain for the previous seven days. The retailer has posted weekly year-over-year gains in foot traffic going back to mid-August.

Target’s CEO sidestepped a question about an emphasis on self-checkout and the large number of closed cashier checkout lanes at a local store. He maintained that the chain’s stores will be well staffed for the holidays. The retailer plans to add 100,000 seasonal workers to its payroll, down from 130,000 last year.

Mr. Cornell said he was confident that Target would meet its hiring goal and put seasonal employees to work stocking and organizing stores, packing and shipping online purchases, assisting customers and handling pickup duties. Target expects that about 30 percent of seasonal workers will remain with the company beyond the holidays.

DISCUSSION QUESTIONS: What do you think is behind Target’s continuing shopper traffic gains and do you expect the trend to continue through the rest of 2022? Do you see staffing, inventory or other specific challenges taking any of the shine off of Target’s holiday season performance?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Hopefully, Target is taking staffing issues and checkout lags seriously so it can have a fighting chance to crush the holiday shopping rush."
"The other inventory issue is the on-order. And we will see that story unfold over the coming weeks."
"Target should definitely watch the staffing issues. Long checkout lines are an awful customer experience. But overall they’ve done a great job of clearing out inventory..."

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21 Comments on "Will Target own the Christmas season as it moves past its inventory glut?"


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Mark Ryski
BrainTrust

Target is well positioned to be a big holiday season winner. Driving traffic into stores is critical, but even more important is Target’s ability to convert that traffic into sales. That’s the key. Staffing and inventory are certainly the areas to watch but, based on past performance, I’m very bullish on Target’s ability to execute. This should be a very happy holiday season for Target.

Dave Bruno
BrainTrust

Target has executed at such a high level for so long, I have every reason to think that they will continue to meet or exceed shopper expectations this holiday season. Their strategic assortment decisions have continued to impress shoppers, while their experience strategy is arguably best in class. I feel certain people will continue to respond to this compelling combination. And their value promise gives them some buffer against economic headwinds, as well. I have no reason to cast any doubt on Mr. Cornell’s confidence that they will meet or exceed comps throughout the fourth quarter.

David Naumann
BrainTrust

Target’s on track for a strong holiday season. It sounds like they have resolved their excess inventory with strong promotions. Target has been successful in managing the surge in store traffic at the holidays by heavily staffing the checkout area with employees directing customers to the proper lines and opening more checkout lanes. The biggest challenge this year is hiring enough seasonal workers to meet their needs.

Richard Hernandez
BrainTrust

Target will do well but at what cost? The investment to sell through their inventory has been pretty significant — and it looks like the investment will continue to be competitive with other retailers in the same boat.

Gary Sankary
BrainTrust

Target is more than ready for an outstanding holiday season. They moved quickly to free up space for high-demand holiday items, and they’ve got a plan to provide staffing to support their guests during the season. With their outstanding execution on their value prop of quality and low price, inflation-challenged consumers will feel good about shopping there. This is the standard operating procedure for Target — outstanding execution and laser-sharp focus on their customers.

Carol Spieckerman
BrainTrust

In its last earnings report, Target made a big point about how it took all of the bitter pills at once to ensure that inventory won’t be a drag on future performance. It looks like Target now has the confidence to own whatever happens from here from that perspective. Hopefully, Target is taking staffing issues and checkout lags seriously so it can have a fighting chance to crush the holiday shopping rush.

Dick Seesel
BrainTrust

Target may face the same headwinds as other retailers — economic uncertainty around inflation and the slowdown in the housing market — but the forceful steps taken to address inventory issues will pay dividends. While other stores are debating how to present and to price their “pack and hold” merchandise from 2021, Target can focus on fresh and in-demand merchandise content.

Even in a possible economic slowdown and a soft holiday season for retail in general, Target has positioned itself to gain market share this year.

Neil Saunders
BrainTrust

Target has done a good job at clearing down a lot of its excess inventory. However our store visits from across the country show a very clear pattern: stock levels are not back to normal and certain departments (notably apparel and home) are looking incredibly shabby compared to Target’s usual high standards. All that said, Target is still a compelling retail destination and I have no doubt it will perform well over the holidays – at least in sales terms. The bottom line may come in a bit light, but they won’t be the only retailer suffering from that.

storewanderer
Guest
3 months 13 days ago

Shabby doesn’t describe how some of Target’s clothing departments look. Some of what I’ve seen in the Western United States is at bad thrift store level in terms of the mess and amount of stuff on the floor. Go back to the same store 3 days later and it is an even bigger mess nobody has even tried to clean up.

Clothing is another problem for Target. Their clothing category seems to be having problems. Nobody is talking much about that. They may have moved the glut of inventory at the home areas but it appears to me clothing has a glut that is not being addressed; customers are not buying even at 70% off. The quality of the clothing looks terrible (Forever 21 type fast fashion thin flimsy type stuff, at higher markups) in women’s and kid’s.

Nicola Kinsella
BrainTrust

Target should definitely watch the staffing issues. Long checkout lines are an awful customer experience. But overall they’ve done a great job of clearing out inventory — and they keep innovating. Unlike other stores, Target has remained fresh, providing customers with new in-store shopping experiences. In addition, they’ve done a great job of store fulfillment and online inventory accuracy which, through pickup orders and people checking stock online before coming to a store, drives additional traffic. Well done Target.

Paula Rosenblum
BrainTrust

I’ve been thinking a lot about trust (blog post soon to come), and its importance across all segments of business. Target did a lot to gain trust from consumers and employees during the height of the pandemic. A *little* excess inventory never really hurt anyone, as it can be used for dramatic promotions and traffic drivers.

Walmart has also gained more trust, but Target also has a different customer, one that I think Walmart aspires to. In the meanwhile, Target owns a segment of the market that would go there to trade down before it went to Walmart.

Stores are clean, having CVS’s within doesn’t hurt and, overall, it feels like a desirable destination. Until and unless Target does something to breach that trust, I do expect the trend to continue. Good people, responsive processes and efficient technology puts Target in the driver’s seat for some time to come.

Brandon Rael
BrainTrust

Target’s resilient, adaptive, and evolving operating model was built for this moment. Despite the economic headwinds, inflationary impacts, and overall diminishing consumer confidence, the brand is well-positioned for an outstanding holiday shopping season. It all comes down to execution, and Target consistently delivers on its brand promise across physical and digital channels and drives an exceptional customer experience.

By taking a very proactive stance on promotional planning, Target has been able to mitigate its over-inventoried situation, and its agile merchandising and assortment planning cycles can adapt to the changing consumer shopping behaviors. It will take speed, agility, and adaptability to meet the changing consumer demands and landscapes as we proceed through the holiday season. My money is on Target rising to this challenge.

Ken Morris
BrainTrust

Target’s store remodels and investment in smart tech are paying off. The inventory fix is helpful, but it’s the combination of the strategic business decisions over the recent years that is making the real difference. True, the self-checkout lines have started to look like the lines at an airport Starbucks. But doesn’t that mean they’re busy? This labor shortage won’t last forever, and Target always has a dedicated person helping move the self-checkout shoppers through as smoothly as possible.

Rich Kizer
BrainTrust

Shine on! It sounds to me like everyone is on deck and the program will do exactly as Brian Cornell explained. It’s all there; traffic substantially up, dated merchandise gone, traffic up over 30% — that’s a GMROI to brag about, and they will do it!

GMROI to dance with after the season, and trust me … they will … be dancing in January.

TARGET !

Mark Price
BrainTrust

The biggest drivers of Target’s continuing shopper traffic gains are consumer focus on value amidst concern about recession, and the high inventory levels that Target has maintained throughout the summer. While Target was successfully able to address excess inventory in the summer, the greatest challenges facing the organization in the holiday season will be about staff. Being able to obtain staff and retain staff in this high employment environment, without significantly increasing wages, will be a delicate balancing act that Target must walk in order to come out of the holiday season in good shape.

Richard J. George, Ph.D.
BrainTrust

Target is a terrific retailer and Cornell’s perspective is encouraging. However the challenge will be to execute during this holiday season. Done right, Target will do very well.

Brian Delp
BrainTrust
3 months 13 days ago

Both Target and even Walmart have positioned themselves well in the middle to take advantage of struggling mall department stores. Kohl’s is working towards this as well, but there has been a lot of business up for grabs from retailers like Bed Bath & Beyond which they’re holding strong onto.

Doug Garnett
BrainTrust

Prediction is hard. Generally, Target has done well anticipating what will come. There are no guarantees — given their general quality as a store, I hope they are right.

Jeff Sward
BrainTrust

It looks like Target is doing more than experiencing good comps vs LY. It looks like they are gaining market share from lots of other retailers. Solid product and good value are winning the day.

Their aggressive actions on inventory over the summer appear to have dealt with the on-hand inventory. The other inventory issue is the on-order. And we will see that story unfold over the coming weeks. January is going to be a very interesting time to tour selling floors and read retailer comments about their holiday season. I expect Target to do better than most, but the promotional chaos of the season is about to descend upon us.

storewanderer
Guest
3 months 13 days ago

Target will have problems. Target has issues with staffing. They seem to have cut the labor budgets and also have many open unfilled positions in the stores.

Target has understocked shelves, poorly staffed front ends, and messy stores at this point. Their Drive Up service is very labor intensive, pulling .com orders from the stores is very labor intensive, and they don’t have the labor to make this all work seamlessly. The cord is about to break.

The only thing that may save them is that Walmart is having even bigger problems. Similar lack of staffing. Trailers and trailers of freight out back/on the side of the parking lots, merchandise getting deeply discounted due to not going out on the floor when it should….

Neither retailer’s toy sets seem to be ready/reset for the holidays either.

Rachelle King
BrainTrust

Why shouldn’t Target be primed to have a strong holiday season? Target delivers on the one thing consumers look for during inflationary times: value for the money. Aa long as the inventory remains in check, Target is poised for a healthy holiday season.

Still, Target should not rely entirely on price-value. They also need to deliver on experience. Long checkout lines during the holiday season are as good as a personal endorsement to go shop somewhere else.

wpDiscuz
Braintrust
"Hopefully, Target is taking staffing issues and checkout lags seriously so it can have a fighting chance to crush the holiday shopping rush."
"The other inventory issue is the on-order. And we will see that story unfold over the coming weeks."
"Target should definitely watch the staffing issues. Long checkout lines are an awful customer experience. But overall they’ve done a great job of clearing out inventory..."

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