Target CEO Says Being Early to a Store-Focused Approach Spurred Pandemic Era Success
When Target CEO Brian Cornell rolled out a store-centered business approach in 2017, the response from analysts and press was less than warm.
“It was a pretty cold reaction,” recalled Cornell during a Sunday fireside chat at NRF’s Big Show. (Cornell was one of the few executives from Target to attend the show in person, after the company scaled back its presence amid Omicron concerns.)
Around 2017, widespread talk of a “retail apocalypse” for brick-and-mortar made a store-focused approach a departure from from the norm. Target’s new plan included a multibillion-dollar investment into store remodels, opening new stores in urban centers such as New York City, and, perhaps most ambitious, redesigning its stores as fulfillment hubs and activating 1,900 fulfillment centers across the U.S.
Despite early skepticism, these investments were crucial to Target’s outstanding performance throughout the pandemic. Cornell, who will be awarded with NRF’s Visionary Award for 2022 in the spring, reflected on how these early investments in physical stores and other fulfillment options defined Target’s performance through an unprecedented two years.
“Those investments certainly paid back in a big way during the pandemic,” he said.
When city and statewide shutdowns occurred during the pandemic’s onset, Target was prepared with alternative ways to get products to consumers, thanks to early investments in curbside pickup and a fulfillment method that involved using “stores as hubs,” Cornell explained.
Full year sales in 2020 grew 19.8% to $92.4 billion. Digital sales grew by nearly $10 billion, with a 235% growth in same-day delivery services.
While digital fulfillment was top of mind throughout 2020, physical store sales have begun to level out and regain importance in recent quarters. More recently, Target reported third quarter total revenues of $25.7 billion, growing 13.3% compared to last year, with stores comparable sales up 9.7% year over year.
According to Cornell, this mix between digital and physical — a long-time area of focus for Target — will continue to define retail and its business in the future.
“As we go forward, there’s going to be that great balance between consumers who still love physically being in a store and who want all the ease and convenience and safety that comes along with just driving up and receiving that order or having something put on their doorstep,” Cornell said.
Cornell also highlighted the need for agility, flexibility and adaptability , especially during a time of such constant change. In many cases, the changes that companies make right now will likely become normal part of business strategies in the long-term.
“A lot of those components are going to be sticking going forward,” Cornell said. “Even in the pandemic, consumers have gravitated to both physical stores and taking advantage of digital and in many cases, same day fulfillment options to meet their needs. I think that’s here to stay. “