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Target's Secret: Sharp Focus on Changing How People Shop

Target's single-minded focus on what customers want and how to get it to them has helped the retailer stand strong against rivals Walmart and Amazon.

Omnichannel shopping means different things to different retailers. Target  (TGT) - Get Target Corporation Report offers a true omnichannel experience, where customers can mix buying online and in-store and have the same flexibility with returns. 

The Minneapolis retailer, however, has never stopped focusing on its retail-store experience. Target has spent heavily redesigning its stores to make them best-suited for the markets they serve. A store in a city, for example, may have grab-and-go snacks at the front while one in a suburban area may have a different layout entirely.

That does not necessarily mean customers going into stores. Target has worked to offer a variety of same-day options, including drive-up and order pickup as well as same-day shipping via Shipt. 

The company has also expanded its at-store drive-up options, enabling customers to pick up their orders anytime, with no set time slot.

“Our guests love the convenience of our same-day services, and we’ve seen tremendous growth in these offerings over the past year, Target Chief Stores Officer Mark Schindele said in a recent news release.

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Target Must Work Smart to Compete

Target, it should be noted, trails Amazon  (AMZN) - Get Amazon.com, Inc. Report when it comes to digital infrastructure and Walmart  (WMT) - Get Walmart Inc. Report in brick-and-mortar stores as well as digital infrastructure. Jason Aten, tech columnist at Inc. magazine, explained it well in a recent column:

“Target can't compete with Walmart or Amazon, at least not on overall scale. It's simply not large enough. Walmart has a much larger brick-and-mortar footprint. Amazon is obviously a bigger player online. Both generate far more revenue,” he wrote.

Catching up in infrastructure seems unlikely and perhaps impossibly expensive.

Instead, Target has found different ways to compete. It bought Shipt for $500 million and that purchase gave it near-national same-day shipping capabilities, which covers up its weakness in online shipping. 

The chain has been incredibly resourceful when it comes to finding ways to offer comparable service to its bigger rivals by adapting its stores, and its latest moves lean into that.

How Has Target Changed the Shopping Experience?

Brick-and-mortar stores remain the focus for Target. Yes, the company has a robust app and website, but its stores have stayed the heart of the company. 

Shipt orders get picked from store shelves as do orders for curbside pickup, and the retailer has invested heavily to make those experiences better.

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Many of these changes seem small, but taken together they show that the company understands that how people shop will continue to evolve. 

In addition, these moves demonstrate that Target knows that consumers may not necessarily know what they want, which requires the company to keep trying new ideas. Some of the changes include:

  • Adding more drive-up/pickup spots: The company has added more than 18,000 assigned spaces for the holiday shopping season.
  • Shopping Partner: This enables customers placing orders to assign other people to pick them up.
  • Forgot Something: This enables customers to add items to their orders after they have been placed. This way customers don’t have to deal with picking up multiple orders that may not all be ready at the same time.
  • Backup Items: This lets shoppers pick alternative items in case their first choices aren’t in stock.

Target has also changed how it uses and trains its in-store personnel. This has included tripling the number of in-store personnel trained to fulfill orders picked up via drive-up or in-store. 

In addition, all new Target store personnel will be “backup trained in same-day fulfillment, as well as in Target’s guest service standard to help every guest, no matter how they want to shop, feel welcomed and appreciated,” the company said in a news release. 

The retailer has also offered its workers more opportunities to train within its store-within-a-store brands, which include Ulta Beauty  (ULTA) - Get Ulta Beauty Inc Report, Walt Disney  (DIS) - Get Walt Disney Company Report and Starbucks  (SBUX) - Get Starbucks Corporation Report.

“Target is exactly right to think of their stores as 'platforms' with the ability to adjust and flex to the changing needs of consumers,” Mark Ryski, founder and chief executive of the Edmonton, Alberta, consultant HeadCount, told RetailWire. 

“The integration of new products and services is what makes this really compelling. Ultimately a great shopping experience is one that satisfies the shopper -- however the shopper individually defines it -- and the intentional design Target is undertaking increases the probability of delivering one.”

This Evolution Is Driving Target’s Stock

Target’s stock price won’t jump simply because the company has added more parking spaces for people looking to pick up holiday orders. 

Instead, it’s the cumulative moves the company has made to continue to slowly evolve the retail experience that will drive customers to its stores, increase sales, and ultimately boost its share price.

What works for Walmart and Amazon may not be right for Target, And realistically, Target does not have the shipping infrastructure that those two giants have. 

What Target can offer, however, is flexibility for its customers, who like Target’s stores but want the ability not to have to go in or even to have their orders brought to their homes via Shipt.

Target shares managed well on Black Friday, dropping just 1.1% on a day on which the Dow Jones Industrial Average posted its worst performance of the year, down 900 points, or 2.5%. The S&P 500 lost 1.8% while the Nasdaq Composite dropped 1.5%.

For the year through Friday, the stock is up 40%.