Target's strategy is all about creating a hassle-free customer experience

 

March 4, 2016

From all indications 2016 is going to be a busy year for Target and the retailer's prime focus will be on the consumer, from refreshing loyalty programs to boosting personalized offerings to streamlining access to such offers.

It's all about continuing what it started in 2015, according to CEO Brian Cornell, who noted traffic has been increasing for five straight quarters and significant progress was made in the last year.

"Guests are telling us with their feet and their clicks that we’re focusing on the right things," he said in an interview posted on Target’s corporate website.

"We've seen industry-leading growth in digital. Our signature categories are growing about three times the rate of our overall business, thanks to investments in quality and differentiation. Our efforts around the fundamentals are improving operational performance and delivering the right foundation for future growth. And we’re just getting started," he said.

The goal ahead is to provide Target shoppers a hassle-free experience and the effort starts with making sure inventory is available in stores and on its online site. Target's been busy revamping the out-of-stock strategy and is making sustainable changes, said the CEO.

It is planning to spend $1.8 billion this year on supply network and technology, and $2.5 billion next year, according to an ABC News report.

So far the changes are having a big impact, with Cornell noting its out-of-stock figure was 40 percent lower in 2015 compared to 2014. It also recently hired on a new leader, former Amazon guru Arthur Valdez, as EVP and chief supply chain and logistics officer.

Target is also targeting its grocery business, and changing processes and practice to boost freshness, product choice and convenience. That's apparently working as well given the food outpaced the company's overall business in the second half of last year.

"But we know we're not tapping into the full potential of our nearly $20 billion grocery business," Cornell acknowledged. Target is in the early stages of a unique partnership with IDEO and the MIT Media Lab to determine innovative approaches with its food business.

The retailer plans to debut two new brands developed from feedback with parents and said it will continue to invest in legacy categories of style, baby, kids, and wellness. It also announced a new limited partnership with Finnish brand Marimekko that will feature about 200 items with the average price under $50.

"Our focus in 2016 and beyond is on providing a seamless, reliable and enjoyable guest experience each and every time. We know we have a lot of work ahead, but our teams are up to the challenge," said Cornell, who took the helm in August, 2014. Since he took the top leadership role the company shuttered its Canadian operations and has made several top management changes.

In revamping product offerings Target is striving to get more product on the floor but decreasing the number of product choices in various categories with a focus on what's selling best. To keep inventory stocked and keep inventory management costs down it's working with suppliers to revamp package size that mesh with shelves' capacity, according to a Nasdaq report.

Cornell described the product effort as a "surgical" undertaking.

"We will never be famous for selling bottled water or laundry soap," Cornell told analysts in a discussion this week. "We have to always have to be in stock because we know these items are key."