Target CorporationTGT has chalked out strategies to take on Amazon AMZN and Walmart WMT in the fast changing retail landscape. The company is deploying resources to enhance omni-channel capacities, coming up with new brands, remodeling or refurbishing stores, and expanding same-day delivery options. Target has undertaken rationalization of supply chain with same-day delivery of in-store purchases for a flat fee along with technology and process improvements.
Here we highlight the efforts taken by the company to be in the changing retail game.
Retailers are ensuring a speedy delivery to customers. They are either acquiring or partnering with delivery service companies for same-day delivery to stay ahead in the race. In this respect, Target acquired Shipt to expand same-day delivery.
The company will commence same-day delivery service in the Northwest through Shipt. This follows the announcement to initiate same-day delivery in New England, Philadelphia, Washington, DC and Baltimore for more than 55,000 groceries, essentials, home, electronics, toys and other products. The company intends to expand the service to majority of stores by 2018 holiday season.
Thanks to Shipt, consumers will get products delivered within an hour. For those signing up for the service prior to the launch, the company has announced an annual membership fee offer of $49 instead of the usual $99. Also, with the annual membership, customers can avail free delivery on orders above $35.
Restock Program & Other Initiatives
The company has rolled out Target Restock program that allows customers to restock their shipping box with essential items online and get them delivered at door steps by the next business day for a nominal charge. Drive Up, an app-based service, is another initiative to expedite the shopping process. The service allows customers to place orders using the Target app and have them delivered to their cars. The company intends to expand the service to 1,000 stores by the end of this year.
This merchandise retailer plans to expand delivery service for customers' in-store purchases to all New York stores and four new cities - Boston, Chicago, San Francisco and Washington, DC - this year. The orders will be delivered either to their home or office on the same day for a flat fee.
Focusing on Smaller Format Stores
Target continues to lay emphasis on developing smaller format stores to tap densely populated urban regions and space-crunched cities. With the changing business scenario and rising competition, Target felt the need to have stores of various sizes and formats in order to better serve its target areas. This approach helps the company to augment sales without substantial capital investment. These types of stores generally have higher sales productivity.
Target opened roughly 30 small format stores in fiscal 2017, and now plans to open another 30 new outlets in fiscal 2018. The company plans to operate more than 130 small-format outlets nationwide by the end of fiscal 2019. It remodeled 110 stores in fiscal 2017. The company plans to remodel 325 in fiscal 2018, 350 in fiscal 2019 and 325 in fiscal 2020.
Target, which shares space with Costco COST , is committed to make a capital investment to the tune of more than $3 billion this year. Analysts pointed that incremental investments may weigh on margins. However, it is better to face short-term impediments in order to attain the long-term goals. Target is trying all means to fast adapt to the altering retail environment.
These initiatives are likely to bolster Target's performance and cushion the stock. In the past six months, shares of this Zacks Rank #3 (Hold) company has rallied 20.9%, outperforming the industry 's growth of 16.3%. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
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