By Neil Saunders
Over the past couple of years, Target’s store execution on festive products has been patchy. However, this year Target won Christmas with a compelling and well-executed assortment of decorations, decor, gifting, and food.
Target gave everything it had to this holiday season, pulling out all the stops on merchandise, omnichannel services, and marketing. It is pleasing to see its efforts pay off with a robust 5.7% increase in comparables. The results put Target firmly on track to deliver its best Q4 numbers in 14 years.
Growth has come from both online and stores. This justifies the investment Target has been making in its shops, both as places to consume and browse, and as points of distribution and collection for online orders. Our data shows that visits to Target stores were up over the holiday season, with shopper satisfaction also increasing.
Over the past couple of years, Target’s store execution on festive products has been patchy. However, this year Target won Christmas with a compelling and well-executed assortment of decorations, decor, gifting, and food. Conversion rates for holiday products were up sharply over last year. Target seems to have been a key destination for many households buying Christmas essentials.
While stores performed well, digital remains the start of the show with 29% growth over the period. Much of this comes down to the various deals Target offered on delivery as well as the strong marketing around online ordering. While we did have some concerns about the impact this push may have on profits, most of the digital uplift appears to have come from store-based collections. As these are higher margin, it has eased our worries considerably.
Although overall holiday spending was robust this year,
Target has engineered its success by focusing on shoppers, creating
experiences, and delivering the right mix of services. This puts it firmly in
the winners’ enclosure both for Christmas and for 2019.
Neil Saunders is managing director of research firm GlobalData Retail.