Target did what department stores should have done

American discount department store chain Target has been one of the biggest success stories over the last five years, especially during the pandemic.

When Brian Cornell five years ago presented the new strategy for Target, it was received with a lot of skepticism. Back in 2017 Target’s investments to store refurbishments and the assortment were not seen as relevant at a time when all the discussion revolved around Amazon and ecommerce.

Since 2017 Target has recorded 19 consecutive quarters of revenue growth and increased its store network from 1 800 to 2 000.

Since 2017 Target has grown its annual $70 billion to $106 billion, a 50% increase in five years. At the same time traditional department stores found it difficult to even remain at the same level.

Target kept broad assortment, when department stores narrowed

As the traditional department stores have been struggling, Target has been flourishing, because of its broad assortment and better price perception. Where traditional department stores have over the last decades relied on fashion and apparel sales, Target has five almost equally important sales categories: Apparel, Food, Essentials and Beauty, Home & Hardlines.

Besides that Target has done excellent job in building private label brands, which customers love.

As a result of that the company reported over $30 billion in sales from own brands.

In terms of digital services Target has been improving the digital services, but it still remains on a rather low level of revenue coming from online.

In 2021 about 20% of Target revenue came from online.

However, online has been a really important growth driver for Target over the last two years. Since the start of 2019 the company has increased it’s sales by $27 billion. Of that $13 billion has come from the growth of online sales.

In stead of running head on to build online sales, like many retailers have done over the last years, Target invested in the core of the business. By renovating the stores, Target made sure the stores are modern and clean. With the assortment the company has doubled down on interesting brands and attractive own brands.

When the fundamentals are in place, online success is also much easier.

Despite having low percentage of sales coming from online, Target is still selling more online (almost $20 billion) than Nordstrom is selling in total (online and offline) and almost as much as Macy’s sold in total before the pandemic.