Here’s a list of pandemic winners we are all familiar with: Amazon, Moderna,
our sanity, and Zoom.
After it reported earnings on Tuesday, we can safely add Target to the mix.
Over the full year ended Jan. 30, the retailer posted revenue of $93.6B — up 20% YoY and a greater increase than in its previous 11 years combined, per the Wall Street Journal.
In a major flex…
… Target estimates $9B of those sales were taken from competitors
How did Target do so well during the pandemic vs. giants like Amazon and Walmart?
Here’s a great breakdown from WWD:
- Omnichannel options: Target has been investing in its digital business for years and — when the pandemic hit — shoppers could buy online, do delivery as well as in-store and curbside pickups (often through its easy-to-use app). In particular, pickups are very economical for stores with shoppers effectively providing “labor.”
- Diverse product mix: While shoppers nabbed essentials at the start of the pandemic, they’ve been spending more on discretionary items, especially during the holidays. Costco and Walmart are 60%+ groceries. Target is only 20% groceries and makes up the balance with apparel, home goods, and other discretionary items.
- Real estate: Unlike Walmart, which is known for its Supercenters, Target has focused on smaller store sizes. These 1.9k “small-retail” stores are conveniently located and serve as great local fulfillment centers for its ecommerce business. Target’s ubiquity is great for brand awareness, too.
- Exclusive and popular brands: Hot fashion and beauty brands used to fight over shelf space in department stores. These same brands now want in on Target to capitalize on the store’s foot traffic.
- Speed: Target is utilizing all of its stores to boost same-day options (delivery or pickup), which is up 700% YoY.
During the earnings call, Target did not provide financial guidance for 2021 but — based on its recent success — it’s well-positioned to stay a winner.