Target stores have seen slumped sales in the past year, with analysts blaming online retailers for putting a dent in sales, while the company has blamed a reduced interest in shopping in general.
So when sales took a hit, Target went back to the drawing board and reduced focus on innovation (and disruption) and increased focus on the basics. And it’s working.
On the up
Sales are now exceeding expectations (up 1.3% in same-store sales) to the point that they can slowly revitalize their innovation roadmap in addition to remodeling stores and opening smaller standalone stores.
In an earnings call, the company pointed to the sale of their pharmacies to CVS and the transition had caused “inevitable friction for our guests,” leading to a decline in scrip count and lower sales in general.
Target says these numbers are now improving, however.
Although the average spend amount per visit was down, the company actually saw shoppers visiting stores more frequently, leading to an overall increase in sales.
Moving forward, the company will be investing in new brands to showcase, for example, a newly minted new home collection for “the challenges of urban living” meaning people that move frequently, which supports their focus on the smaller format urban stores on college campuses and urban areas.
Target will also be focusing on their competition with online retailers, taking major steps to improve their logistics.
Just this week, they announced their acquisition of Grand Junction, which we liken to the Expedia of shipping and delivery. Not only could this make their rapid shipping competitive with Amazon, they could use the new acquisition to create an assembly and installation program to take on competitors even more strongly.
Back to the basics
Although innovation and disruption have been put on hold, going back to the basics has proven to be a successful recovery method for Target who is looking forward but in measured ways.