Target Corp. Chairman and Chief Executive Officer Brian Cornell gave a keynote presentation at the National Retail Federation Big Show in New York City. He explained how Target Corp. has reinvested in its business from technology to people and the results it is now seeing.
Target’s holiday season was a success with same-store sales increasing 5.7 percent, compared to a 3.4% increase last year. This gives Target a solid foundation for 2019, and Cornell intends to keep it going. Cornell pointed out that Target’s 2018 sales were its best in over a decade.
What is Target’s 2019 plan to improve on last year? Cornell emphasized three areas of focus: Omnichannel, People (customers/employees), and Private-label Brands.
The Power of the Store
Although Target’s digital business has made positive strides, surpassing the industry average by 50%, Cornell said that Target’s stores were its greatest advantage. The company’s stores have been a major source of growth, thanks to its investments in omnichannel systems like buy online, pick-up in-store. Cornell stated that Target stores fulfill three out of four online orders, regardless of whether they ship in-store or are available for pickup.
Cornell responded to Matthew Shay, NRF President and CEO, a question about the merging online and offline shopping. “Retailers need amazing physical and digital experiences. Both are desired by the consumer. We want our customers to be able to interact with us in the way they prefer. We are listening to our customers and responding. To revitalize our stores, we have invested billions of dollars.”
Cornell stated that “young people still enjoy the social interaction of instore shopping.” “Our customers, even the younger ones, still love the store experience.”
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Human connection is important
Target invested $7 billion in capital in its stores to revive them. Target also allocated $1 billion to its employees in the form increased wages and better training. Target is committed to providing personal service.
Cornell stated that Target’s success is dependent on the quality of its people. Our team was the best investment. Human connection is important. It is part of the shopping experience and what distinguishes our brand.
Target is not only focusing on its employees but also aiming to improve the shopping experience of its customers. Technology is one way Target does this. Target is a pioneer in adopting technology systems that make shopping easier for customers, including curbside pickup and an app available in-store.
Cornell told the retail executives that no matter what market they are in, whether consumer sentiment is positive or negative, it is important to keep your eyes on the following things: changing consumer behavior, involving the consumer in all decisions, and being open to reinvesting in the business. Always start with the customer.
Private Labels are a Growth Channel
Target identified private-label brand as the key to its recent revival and future growth. Target has launched 20 private-label brands over the past two years and is now seeing these brands drive new traffic to its stores and website. Target’s private label brand decisions are not made without the input of its customers.
Cornell noted that “consumers were involved in the development of these brands.”
Cornell is aware that Target has benefited from a strong macroeconomic environment, in addition to the internal improvements. Cornell sees this strong economy as continuing in 2019, and Target is positioning itself to take advantage.
Cornell stated that “we’ve all benefited from the macroeconomic environment.” We also spent a lot time looking at traffic growth and marketshare. These are the points that we should be focusing on. What economic data are we seeing? Strong GDP environment, historically low unemployment rates; higher wages and lower gasoline prices; high consumer confidence; retail spending exceeding GDP growth. All retailers have the opportunity to increase their market share.
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Sears Saved: Chairman Eddie Lampert Reached a Nearly $5B Deal
According to , Sears Holdings made a deal with Eddie Lampert, its chairman, and ESL Investments, an anonymous source. reports that the agreement was reached early Wednesday by CNBC . The agreement, worth $5 billion, will keep approximately 400 stores open. It will also save close to 50,000 jobs. After Sears rejected Lampert’s original offer last Wednesday, a bankruptcy court offered the chairman one final chance to make a $120m deposit and re-enter bidding. The deal is not yet secured as Sears’unsecured creditors don’t support Lampert’s bid. Also, the bankruptcy judge has not yet approved the deal. This will be reviewed by the court on January 31. According to a source familiar with the matter, ESL Investments raised its offer by $150 millions and assumed more liabilities in order to reach the agreement.
Total Retail’s Turn: While it appears that this deal will save Sears Holdingss, the bankruptcy court still has not given final approval. Additionally, not all Sears supporters are on board with the agreement. Sears will have to begin the long and difficult journey back to profitability if this deal is approved. This includes addressing the neglected stores, outdated technology and digital efforts, as well as other issues that are weighing down the brand. Sears hasn’t been financially stable since 2010. A complete overhaul of the company’s physical locations and ecommerce offerings is necessary to get Sears back in competition with big-box retailers. John Nash, chief market officer at RedPoint Global stated, “To be successful in this new environment brands and retailers need to provide a consistent experience across all channels of engagement, informed from context and past interactions. To keep up with customers’ pace and understand what messages they want, you need a single view of your customer that is accessible in real time. Sears must invest in customer data technology if it wants to be a relevant brand for modern consumers.