Targeted buyers who use same-day delivery in urban stores buy five times more items



[ad_1]

Target Corp. indicates that urban shoppers who benefit from same – day delivery service in small – format stores purchase many more items than those who buy and buy them.

The retailer offers buyers the opportunity to purchase their items and arrange delivery at a time of their choice, for a fixed fee of $ 7.

"Once we have solved the problem of deferring the order at home, it allows them to shop more, much more," said John Mulligan of Target.

TGT + 2.73%

chief operating officer, at the call of the results, according to a transcription of FactSet. "The average size of the baskets on these orders is more than five times the average of these locations and includes a very large number of items in our" Home "category."

The homes category was one of the areas in which Target recorded a 3% growth in its store sales in the first quarter. Overall, same-store sales increased 4.8%.

See: Kohl shares sink as promotions and shipping costs weigh

Now that Amazon.com Inc.

AMZN, + 0.43%

has promised key members to deliver their orders in one day instead of two, competitors have been even more critical about the delivery options they offer that can go in this direction.

Target, like Walmart Inc.

WMT, + 0.80%

, takes advantage of its store network, with drive-up, which makes digital controls available to customers without leaving the car park, collecting orders in stores and same-day delivery via Shipt. The retailer said same-day delivery options generated more than a quarter of first-quarter comparable store sales.

Target reported a 42% increase in comparable digital sales, with more than 80% of the digital volume in stores, which, the company said, resulted in lower costs.

Last year, digital accounted for $ 5 billion in revenue, said Mulligan, and about two-thirds of that volume was filled in stores.

"Despite the success we are already seeing, we continue to be questioned about the long-term sustainability of keeping our stores at the center of achievement," he said. "Our response is empathetic: we are convinced that it is the best long-term solution for Target."

See: Walmart's digital efforts bear fruit in battle with Amazon

While traffic was heading towards the stores, Target's general manager, Cornell, discussed the ongoing restructuring across the country: 53 in the last quarter, with the company on track for 300 this year . Seven smaller stores also opened during the quarter.

"One of Target's successes has been the revitalization of physical stores, many of which have been renovated and offer a much more enjoyable and appealing shopping experience," said Neil Saunders, managing director of GlobalData Retail.

"These enhancements, combined with improvements to store ranges – particularly in apparel and beauty – have made them more appealing destinations, resulting in more customers."

Traffic growth was 4.3% for the quarter.

Target's focus on these same day options gives him an edge.

"While this model is advantageous for generating sales, it is also very positive for margins because running orders in-store is more profitable than home delivery," writes Saunders. "That's one of the reasons Target was able to design better numbers."

Overall, Charlie O'Shea, a senior retail analyst at Moody, believes that Target will be one of the most successful retailers in the US, even though the threat of tariffs is imminent.

"Target hit the bull in the first quarter, every significant step demonstrating the strength of its renewed strategy and successful execution," said O'Shea. "The continued deployment of proprietary brands generates traffic both in stores and on websites. Despite a brutal price environment due to the ongoing battle for market share between Walmart and Amazon, margins are holding steady. "

Like Walmart, Target warned that higher rates would result in higher prices for customers.

Do not miss: Dressbarn put to pasture while Ann Taylor's parent, Ascena, tries to grow

"As a customer-focused retailer, we are concerned about pricing because they drive up everyday product prices for US families," said Target's Cornell. "Our team continues to monitor trade negotiations and develop contingency plans to help mitigate the impact of rates on our customers and our business."

Quo Vadis chairman John Zolidis is also optimistic.

"We are confident that Target is well positioned to continue to win, as many competitors with financial constraints such as Toys" R "Us, Gymboree, Payless ShoeSource and Dressbarn, to name just a few. recent liquidations, "he said. "We believe investors have exceeded Target's recent sales momentum because of its modest overall growth profile and its inability to avoid a further margin contraction.

"After the first quarter of year 19, we think it's harder to ignore Target's outperformance on the front line," Zolidis said.

Target stocks climbed 7.8% in trading on Wednesday, and have risen 20% since the start of the year, outperforming the SPDR S & P Retail ETF

XRT -0.02%

, which is up 1.4%, and the S & P 500

SPX, + 0.14%

which gained 12.6%.

[ad_2]

Source link