Target Corp is the first big box retailer to report strong sales over the holiday and all of 2017 both online and in physical stores. Boosted by a combination of healthy US consumer spending and corporate restructuring/rebranding, the retail chain saw sales up 3.4 percent in sales open more than a year in November and December, a remarkable recovery from the 1.3 percent decline from the same period last year.
Target chairman and CEO Brian Cornell comments, “We are very pleased with our holiday season performance, which reflects the progress we’ve made against our strategy throughout the year.”
And part of that strategy, of course, has been to compete with US online spending, particularly with the fast growth of Amazon.com Inc.
Cornell continues, “As we look ahead to 2018, we will build on the foundation we established this year by launching additional exclusive brands, enhancing our digital capabilities, opening approximately 30 small-format stores and tripling the size of our remodel program to more than 325 stores.”
Of course, it is not just the rebranding that has boosted sales. Economists have been predicting that low unemployment and higher wages have given consumers more confidence to spend this holiday season, especially when compared to recent years.
Indeed, major chains like JC Penney, Kohl’s Corp, and Macy’s Inc all reported sales growth in some critical holiday months. Costco also shows strong pacing in December.
And a big part of that increased spending was through online portals.
According to GlobalData Retail Managing Director Neil Saunders, “Digital was an undoubted success with robust online growth underpinning performance.”
Still, Saunders thinks more can be done. He argues, “However, we also think Target needs to make stores more compelling so that those customers collecting items in shops browse and buy more while doing so.”
But Cornell seems to have a strategy. He recently boosted investments in the supply chain and, as mentioned, launched new brands to entice shoppers. When shoppers enter the stores, too, they will find drastic remodeling and, most importantly, lower prices. And Cornell even headed up Target’s acquisition of the grocery-deliver startup Shipt Inc, probably in an effort to match services that are already available from Amazon (who acquired Whole Foods, if you recall) and, of course, WalMart Stores Inc.
Target share had been down 6 percent on the year but jumped more than 4 percent to $70 in premarket trading in anticipation of this announcement.