Target continues to top the lists of major retailers thriving during the pandemic, even as many businesses struggle. CEO Brian Cornell recently pointed to one factor that has allowed Target to make the best out of an unprecedentedly bad situation — the fact that at Target you can buy most anything.
The retailer has been seeing a type of guest recently that shops all of its categories, Mr. Cornell told CNBC’s Squawkbox. He described the chain’s diverse product assortment as being especially important during the pandemic, since customers are attempting to limit the number of trips they make to stores. For example, Target has found parents with kids who are quickly outgrowing clothing visiting the store to buy private-label apparel, then moving to adult clothing sections and on to food and beverage.
Mr. Cornell’s statements come after Target posted outstanding third-quarter results with increases both in digital and physical sales. The chain saw online sales jump 155 percent and physical store sales increase 9.9 percent. The retailer’s pandemic-era success is also shared by its bigger rival, Walmart, which reported likewise impressive third quarter numbers, including a 6.4 percent gain in same-store sales.
While the Squawkbox interview touted the in-store experience as the basis for Target’s expectation-busting quarter, the chain has also been notably successful in its leveraging of delivery and curbside pickup/BOPIS, services that have become essential to customers during the novel coronavirus pandemic.
Discussion Questions: Do you agree that one-stop shopping is the key to Target’s recent success and will it remain so after the threat from COVID-19 diminishes? Should more specialty retailers broaden their mix to try and compete with chains like Target or would that, in most cases, be a mistake?
Comments from the RetailWire BrainTrust:
The pandemic had a weird impact on marketing fundamentals: since one-stop shopping brands (e.g. Amazon, Walmart, Target) have grown successfully, it can create the feeling that “offering everything to everyone” is the right approach. Other brands like Sears have tried this before, and were eventually bypassed by newer, more focused brands that better met the needs of their specific target group. A clear brand promise that solves a key problem of a well-defined core customer will remain fundamental to business success.
Xavier Lederer, Business Growth Coach, Founder & CEO of Ambrose Growth
One-stop shopping is surely helping Target, but that’s not the only reason they are excelling right now. They have created a great shopping experience, from the private brand merchandise, to the renovated store layouts, to the fulfillment options. If they keep innovating and focusing on customer experience, I believe their success will continue long after this pandemic.
Lauren Goldberg, Principal, LSG Marketing Solutions
Specialty retailers should not broaden their mix to compete with chains like Target. That is the fastest route to insolvency: competing on the dominant player’s strength. Instead, they should establish credibility in their niche, go deep, and add service elements to differentiate further. Use data to craft higher engagements and launch or enhance cutting edge data science-based loyalty programs.
As for Target, the company has been steadily shoring up its core strengths of merchandising, expanding grocery, and integrating online and offline shopping. The stores are bright, colorfully displayed, and the associates are helpful. So while the COVID-19 pandemic shifted purchase behavior to online and consolidated physical store visits, the brand’s underlying strengths allowed it to outperform others.
Mohamed Amer, Independent Board Member, Investor and Startup Advisor
Target has gotten it right in MANY ways. I don’t think they will slow down their innovation, their commitment to the consumer experience, integration of omni-present options, and delivery of consistent prices and quality. Not every retailer can navigate such a balance — but Target has raised the bar.
Dave Wendland, Vice President, Strategic RelationsHamacher Resource Group
Just when you think Target is on a roll — their CEO claims their success is due to “one-stop shopping”? C’mon. If that’s the case, Amazon and Walmart will win as they offer better selection and (mostly) better pricing. If other retailers heed Target’s advice and expand their assortment it will be a losing strategy. Target’s recent success is due to multiple factors: pre-pandemic emphasis on digital options, ability to pivot in an agile manner, and most likely a loyal shopper base because of Target’s unique assortment and good pricing.
Michael La Kier, Principal, What Brands Want, LLC
Minimizing store visits as an omnichannel one-stop shop helps consumers access essentials and mitigate health risks. Investing in a robust assortment, including private label grocery, has inspired Target shoppers to fill their carts. As a one-stop shop, Target will still earn loyalty after the pandemic for its convenience, time savings and quality. Broad category management boosts complexity, so specialty retailers seeking to compete with Target face steep barriers to entry. Dominating a niche makes more strategic sense for them.
Lisa Goller, Content Marketing Strategist
Read the full weekly consensus