Target (TGT) – Get the target company report has seen its sales increase steadily since the start of the pandemic until now. The chain strengthened its already strong relationship with customers during the darkest days of covid and spent wisely to scale its business to adapt to changes in the way customers shop.
This has included expanding the availability of curbside pickup as well as Buy-In-Store Pickup Online (BOPIS) options. Target also continued to invest in its Shipt same-day delivery service. The chain, however, struggled, like many others, with inventory issues.
The pandemic has rendered past purchase data less than useful and consumer habits have changed. This led to shortages at the start of the pandemic – when it was difficult to buy toilet paper, paper towels, hand sanitizer and a few other items – and now it has left the retailer with too much stock in certain areas.
Target experienced a rapid slowdown in spending in its apparel, home and durable goods categories starting in March, CEO Brian Cornell said at the chain’s press conference. call for first quarter results.
“While we anticipated a post-stimulus slowdown in these categories and expected consumers to continue to refocus their spending on goods and services, we did not anticipate the magnitude of this shift,” said he declared. “..this has caused us to have too much inventory, especially in large categories including kitchen appliances, televisions and outdoor furniture.”
These overages have led the company to seek to reduce some of these items and sell others to free up space for good inventory that may not be needed immediately. Cornell said the chain would discount certain items and
And with very little unused capacity after two years of unprecedented growth, we faced high storage costs and indicated a resizing of our inventory position. Nonetheless, we’re still seeing healthy overall spending, I guess, even as their spending continues to trend.
Now Target has delivered on that promise with an expanded version of its annual sale for students and teachers.
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Target is rolling out discounts for students and teachers
Target has decided to offer students a 20% discount through its Target Circle rewards program. It’s also bringing back duty-free weekends and will extend its Teacher Prep event from July 17 to September 10. That’s six weeks longer than the scheme, which offers teachers 15% off school supplies, typically runs.
“We know back to school is a big milestone for millions of families across the country – and we’re here to help by introducing even more ways for customers to save and find everything they need in one convenient place,” said Jill Sando, director of merchandising at Target.
Target will also be offering its special “Deal Days” (essentially its response to Amazon’s deals (AMZN) – Get the report from Amazon.com Inc. Prime Day July 11-13
Target had to make some tough inventory choices
The retailer ended up with too much inventory in certain areas and had to make decisions on how to handle this.
Christina Hennington, Chief Merchandise Officer, explained the difficult situation the company found itself in and how she chose to
manipulate during the call for results.
“As we laid out our plans for the quarter, our task was to anticipate spending developments in circumstances no one had ever seen before, given that we were about to compare stimulus payments over two years. historically high feds. As such, we have relied on numerous forecasts and estimates, both internal and external, to help us determine our view for the quarter. Despite this cautious approach, the combination of actual demand materialized differently than we anticipated,” she said.
Basically, the chain had to decide which items to keep and which to mark down so they would sell out faster.
“Also, as supply grew and demand moved away from bigger, bulkier products like furniture, TVs and more, we had to make tough trade-off decisions. We could keep this product in knowing it would sell out over time or we could make room for fast-growing categories, like food and beverage, beauty and personal care, and household essentials,” “To preserve the quality of shelf presentations and support the customer experience, we chose the latter, which resulted in additional markdowns that reduced our gross margin,” she explained.
Lower margins are negative in the short term, but Hennington sees a silver lining.
“While these decisions have been difficult, we believe they will pay off in the long run, as long-term retention remains our top priority,” she said.