At a meeting on Tuesday for the investor community, Target Corporation Chairman and CEO Brian Cornell and members of his leadership team presented strategies intended to put Target on a clear path to growth. The retailer plans to differentiate itself in the marketplace through stronger merchandising authority, as well as a shopping experience featuring mobile as its front door. In addition, Target will create a headquarters team that is more agile, efficient, and guest-focused.
The retailer is taking a channel-agnostic approach to growing its business, driving a total Target experience across stores, online, and mobile. The company has found that guests who shop Target in stores and online generate three times the sales compared to guests who shop in stores only.
Continued enhancements in technology, supply chain, and inventory management are intended to spur Target’s continued annual growth in digital channel sales of 40 percent, as well as contribute to a total projected sales growth of 2 to 3 percent and comparable sales growth of 1.5 to 2.5 percent this year. Target also plans to tailor its assortment and offer more locally relevant products, with demographics, climate, location, and similar guest-led factors driving merchandising decisions. Additionally, Target will strengthen its data and analytics and technology capabilities to deliver more personalized digital experiences, loyalty programs, and promotional offers.
Target’s store opening plans will focus on more flexible formats such as TargetExpress and CityTarget, which cater to guests in rapidly growing, dense urban areas. Throughout this year, the retailer will open eight TargetExpress locations across the country.
This year, Target expects to invest between $2 and $2.2 billion in capital expenditures, including a $1 billion investment in technology and supply chain. Meanwhile, cost savings of $2 billion over the next two years will fuel Target’s growth and drive profitability. These savings will be realized through operations, technology, and process improvements; supply chain and sourcing efficiencies; and corporate restructuring.
The restructuring will be concentrated at Target’s headquarters locations and focus on driving more efficient capabilities, removing complexity and allowing the organization to move with greater speed and agility. This includes the establishment of centralized teams based on specialized expertise and the elimination of several thousand positions over the next two years.