Target: make it convenient & it will grow
Target reported once more a stellar growth quarter on all fronts with 12,7% comparable growth. Growth was driven by the stores. This due to two reasons:
Comparable store sales grew by 9,7%
online grew by 29%, but 80+% of online orders are fulfilled from stores
Especially rapidly Target has grown its same day online services: 60% growth from last year, which had a strong also. The biggest growth has come from the Drive Up services, which grew 80+% with a huge 500+% as a backdrop from last year.
Drive Up has grown almost 10 times since 2019.
Drive Up and other same day services by Target are a testament to the importance of convenience. The Drive Up is the ultimate convenience of Click & Collect as the customer does not need to walk anywhere, everything is brought to the vehicle.
In total online has jumped from less than 10% of sales prior to pandemic to almost 20% of sales this year (down from pandemic highs of 20+%). Online sales for this year have grown more than threefold since Q1-Q3/2019.
Due to the big growth in online and store fulfilment of online orders, the store network of Target is gradually being transformed. The company opened 27 new stores, of which 20 were small format stores, with an average of 30 000 square feet of space. This is less than one quarter of an average Target store.
Similarly to the other US retail giant Walmart, Target is also reading itself up to the supply chain constrained Christmas. The company reported it had increased inventories by more than $2 billion, up about 18% from las year.