Target has always relied on its certain undefinable magic. The chain has always been a bit classier than its rivals and, in recent years, it has recaptured that "Tar-Jay" magic by really focusing on its stores.
Yes, the company has invested in digital and delivery, but the core of the company remains its brick-and-mortar presence and CEO Brian Cornell fully understands that. He has led a remodel of over 1,000 of the company's stores that's more than just new paint and an updated look.
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Target's remodels have been market-specific revamps of its stores. In a market where customers may come in on foot, for example, snacks and other grab-and-go items might be positioned at the front of the store. In other cases, maybe in a tourism heavy market, the supplies people need when away from home may be up front.
Add in that Target has created innovative owned-and-operated brands and partnered with Ulta Beauty (ULTA), Starbucks (SBUX), Walt Disney (DIS), and Apple (AAPL) for stores within its stores, and it's easy to see why many people see Target as a destination. Yes, you can get what you need, but you may also find a new celebrity collaboration, or sip a latte while you look for the latest affordable beauty supplies.
In addition to understanding the value of his chain's physical locations, Cornell also understands that evolution must be constant. That's why Target plans to invest $4 billion to $5 billion in 2023 to "expand its guest-centric services, operations network of stores and supply chain facilities, digital experiences and other capabilities." the company shared in a press release.
And, while some of that money will go into backend changes customers won't see, the entire point of the investment is improving your shopping experience.
Image source: BRYAN R. SMITH/AFP via Getty Images
Target Invests 'Affordable Joy,' Better Shopping Experience
Target has a very different approach from Walmart (WMT) its chief brick-and-mortar rival. Walmart stores could be described as efficient and the chain has clearly focused on delivering low prices, but there's no charm to the vast majority of the retailer's stores. You go to a Walmart because you need things, probably not because you particularly enjoy the shopping experience.
It's very clear that Target takes a different approach and wants to make customers want to visit its stores.
"Investments in our shopping experience and frontline team have deepened our guests' engagement with Target during the last few years, which is reflected in our continued traffic and sales growth," said CFO Michael Fiddelke.
Target plans to add 20 new stores this year and fully remodel another 175 (many other stores will also receive updates).
"Many of the new stores will include new design elements that reflect the local community, experiences that highlight new brands, assortment and services, and sustainable features," the company shared.
The remodels will bring Ulta Beauty and/or Apple shop-in-shop experiences to more locations.
At the heart of the changes, however, is what Target has defined as delivering affordable joy.
Target "plans to launch or expand more than 10 owned brands, bringing thousands of new, differentiated products to guests at incredible prices. Additionally, the retailer will appeal to value-conscious shoppers with more items starting at $3, $5, $10 and $15. In addition, the retailer will deepen its focus on offering clear, compelling promotions, introduce enhancements to its Target Circle loyalty program and debut a new advertising campaign that celebrates how Target delivers affordable joy," the company explained.
In addition, the chain plans to add free drive-up returns to many of its locations. That will allow people to begin the return process in the Target app, then simply pull up and drop-off the item(s).
