We look at Target’s performance across the holidays and new leadership changes, including within its food business.
Benefitting from investments to capture share in toys
Target delivered a strong performance over the holiday period in November and December, with comparable store sales up 5.7%. This was a significant improvement on the 3.4% growth it delivered last year and accelerated its third quarter performance. The growth was driven mainly by an improvement in traffic. Sales growth was strongest in toys, baby and seasonal gifts.
Growing its toys business had been a key focus for the business following the exit of Toys R Us. It expanded space for the category, increased its ranges and invested in inventory. Commenting on the performance, Brian Cornell, Target’s CEO, said,
“This performance demonstrates the benefit of placing our stores at the center of every way we serve our guests, including both in-store shopping and digital fulfillment.”
Source: IGD Research
Digital sales up 29%
The retailer also saw its digital sales grow 29% in November and December. Its ‘Store Pickup’ and ‘Drive Up’ programmes saw growth of more than 60% year-on-year, accounting for a quarter of the retailer’s digital sales. The retailer remains on track to grow digital sales by more than 25% for the full year.
New leadership for its food business
Target has appointed Stephanie Lundquist, formerly the retailer’s chief HR officer, as president of food and beverage. In this new role she will be responsible for all aspects of merchandising and operations for food and beverage. This will include strategy development and implementation, advancing the retailer’s progress in the category and driving operational excellence. Melissa Kremer, senior vice president HR, has been promoted to as the retailer’s chief HR officer.
Opportunity to reset food strategy
This appointment is the most significant of the changes Target is making within its leadership team. While the retailer has made impactful changes across most of its non-food categories over the last two years, there have been fewer changes within its food business. This is an important traffic driver for the stores and could become a more meaningful part of the business over time.
Target has built a solid foundation for its food business, developing a strong suite of private brands and adapting its ranges over the last few years. It now offers more unique items and depth in natural, organics and better-for-you products. The acquisition of Shipt has also transformed its same-day delivery capabilities positioning it to potentially become a leading operator in the grocery ecommerce channel.
Bringing marketing and digital under single leadership
Chief marketing officer, Rick Gomez, has been named chief marketing and digital officer. He will lead Target’s digital team, focusing on personalisation, loyalty and the shopping experience. Mike McNamara, Target’s chief information officer, will now lead the enterprise data analytics and business intelligence team, in addition to his leadership of Target’s technology services.
Target also announced that chief financial officer, Cathy Smith, will be retiring. She will continue in her role as until her successor is named, and then move to an advisory role until May 2020. She has played a key role in shaping Target’s strategy since joining the business in 2015.
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