Target Hits a Bullseye in the Pandemic Retail Race
Target has seemingly cracked the code to surviving a pandemic and will likely exit the COVID-19 crisis stronger than ever.
With its UX-friendly app, streamlined curbside and in-store pickup options, quality private-label brands, generous rewards program and exciting partnerships with Ulta, Levi’s, Disney, and now Apple, Target has worked hard to keep up with shifts in technology and consumer behavior.
And its approach to retail appears to be favored among shoppers: In 2020, Target saw its sales grow by more than $15 billion, which was greater than the company’s total sales growth over the last 11 years.
What is perhaps most impressive is that 95 percent of Target’s fourth-quarter sales came from its stores—during a pandemic.
Let’s take a look at what Target is selling us and why it’s so darn good at it.
When fears of spreading COVID-19 disrupted the shopping patterns of millions of Americans last year, Target leaned hard into digital.
The retailer pressed the gas on BOPIS and rapidly expanded its curbside pick-up options at stores nationwide. In return, Target gained 10 million new digital customers in the first half of 2020.
To keep up with the growing demand for same-day pick-up and delivery, Target is reportedly investing $4 billion annually to roll out new stores, remodel existing stores, and streamline its ability to fulfill online orders.
The initiative also includes fast-tracking the supply chain and improving the way Target coordinates its stores with its distribution centers and suppliers.
Raymond Riley, co-CEO of Progress Retail, a retail operations and employee experience platform, told RETHINK Retail that he believes Target’s investments will ultimately position the retailer as a top seller of convenience.
“I think many people, regardless of work from home dynamics, are in many ways busier than ever before, Riley said. “So that opportunity to save time, consolidate on shopping, and get in and out remains important to a lot of consumers.”
Target also plans to open dozens of smaller-format stores near college campuses and in major cities where space is limited.
Although the smaller-format stores will feature fewer products than its traditional stores, Target is taking a hyper-local approach when it comes to merchandising.
For example, when I visited a small-format location in Downtown Seattle last June, I noticed there were warm scarves stocked near trendy bathing suits in the store’s small apparel and accessories sections.
Despite it being June, the temperature was near the mid-50s that day and many people were bundled up underneath a few layers of clothing.
But if we were to visit a small-format location near the University of Austin, the cold weather gear would likely have been pulled at the first sign of spring.
By learning what local guests need and adapting accordingly, Target can streamline costs and lift sales in local markets.
Part of what makes the COVID-era Target experience so unique is the attention the retailer places on the small details of its store operations.
Throughout the pandemic, Target has gone above and beyond to ensure shoppers feel comfortable while shopping in-store.
By installing plexiglass shields at checkout lanes, assigning a team member to clean carts at the front of the store, and installing signs with social distancing guidelines, Target has created an environment where customers can visually see the steps the company has taken to increase safety and cleanliness.
Although these details may seem small, they make a huge impact on the minds of consumers.
“There’s always someone there cleaning carts without fail,” Riley said. “Target is communicating subconsciously and consciously to consumers walking in that it can be trusted. I’ve been in many other retail businesses where you don’t see that same level of detail.”
Come for the clean carts, leave with something you need (and maybe something you didn’t).
Although Target has seemingly cracked the code to pandemic success, I couldn’t round out this article without touching on the goods themselves.
Surely the convenience aspect is a huge selling point, and one could argue that Target has become an amalgamation of everybody’s favorite c-store, grocer, and department store.
But the fact of the matter is Target has done a pristine job at partnering with brands that share a similar ethos while focusing hard on its own private label brands, particularly its apparel, grocery, and homeware lines.
Need a sherpa-lined denim dog bed for your aesthetically-minded pooch? Target’s Levi’s x Wag label has three options for small to extra large dogs.
Looking to prepare a charcuterie board for your visiting vegan mother-in-law? Target’s Good & Gather grocery line has natural, organic, and plant-based options for everyone at your dinner party.
Through its partnerships and private labels, Target has continued to gain market share across all five of its core merchandising categories.
It’s a store for the Gen Z college student, the Apple-obsessed techie, the new homeowner, the foodie, and the beauty guru in-training. Like its universally-recognized red logo, Target hits the mark—and then some.
“Target’s got everything going for them,” Riley said. “The right real estate, product mix, price for value, and most importantly, scale.”