Macy’s, Kohl’s, J.C. Penney, and even Walmart should now be in the lookout for Target as it sets to prove to be the newest department store in the country.
Gone were the days when these team of department stores just sell apparel and accessories to its customers. Target has moved forward to the grocery department and reconstructed its online service and added more services to its shoppers like the pickup in-store and curbside.
In its 3rd quarter, Target increased its same-store sales by 10%. The apparel department represents 20% of the sales, behind food and beauty products.
Target’s shopping experience made it better for its consumers. In the apparel business, they have added more mannequins in their store to show off more new styles. They have also invested in more modern and diverse looking ones that entice different types of markets. They also have spent in a spacy dressing room with good lighting, these add up to the experience of buyers plus their lower prices compared to other department stores.
Another thing that Target developed was their wares. They have collaborated together with brands such as Levi’s and Champion. There were some speculations that they just might add Nike to their brands. Since Nike pulled out from Amazon. This move alone could bring a lot to Macy’s, Kohls, JCP because they were the primary outlet for this sneaker giant.
As compared to the Target estimate vs. actual sales and shares, take a look at the figures:
· Total sales: $18.22 billion estimates vs. $18.7 billion actual sales
· Earnings per share. $1.19 estimate vs. $1.36
· Same-store sales: vs. 3.5% estimated increase vs 4.5% increase actual
· Gross profit margin: 29% estimate vs. 29.8%
· Full-year earnings guidance $6.18 vs. $6.25 to $6.45
According to the CEO of Target, Brian Cornell, online orders cost drops 90% when shoppers use same-day options. Their digital sales increase by 31% because of same-day services, and that itself takes 80% of the growth. These services include curbside pickup, same-day delivery via ShipT, buy online, pick up in-store.
On the other hand, Walmart started its online retail, but they have not been successful. In fact, they are still losing money with their online sales. Target got to find means to cut down on different costs and eventually gain more profit from it.
The CEO explained, “When it’s delivered by our stores … those look a lot more like store economics”. The way it works it that Target fulfills the online order from its store rather than shipping it from its distribution center. This itself decreases the cost by 40%.
When customers order online and decide to pick it up at a store or curbside or have it shipped via Shipt, 90% of the cost goes away. Walmart has been slowly following this trend.
This is one thing that the giant Amazon cannot compete with. It doesn’t have the brick and mortar stores unlike Target and Walmart, but it has been adding more lockers to Whole Foods store and shopping malls.