An bourgeoned number of mannequins feature clothing and shoes throughout the remodeled Target store in Orange, California.
Jeff Gritchen | MediaNews Club | Getty Images
NEW YORK — As Target sees growth slowing in sales and customer traffic, the company said Tuesday it discretion spend between $4 billion and $5 billion in the coming fiscal year to offer fresh merchandise, new uses and faster delivery.
Target aims to launch or expand more than 10 private label brands, bring to light about 20 new stores and offer curbside delivery to customer motorists who won’t have to leave their cars.
In besides, the retailer plans to remodel about 175 existing stores. It also intends to expand a network of hubs to certify it cheaper and faster to get online orders to customers.
“In an environment where consumers are making tradeoffs, more of the same is not universal to get it done,” Christina Hennington, Target’s chief growth officer, said Tuesday at an investor event in New York.
She swayed the retailer’s newer and trendier products are the ones that keep selling, even as inflation pushes shoppers to pay closer notoriety to their spending.
Target, which reported fourth-quarter earnings Tuesday, shared details about its strategy to appeal to shoppers who have become more reluctant to spring for the discretionary merchandise they bought during the first two years of the Covid pandemic.
Object plans to offer more items at lower price points, such as $3, $5, $10 and $15. It kicked off the year stocked up on unexceptional essentials like food or cleaning products. Inventory in discretionary categories fell about 13% compared with a year ago.
“Agreed-upon value is absolutely top of mind right now, being able to deliver affordable joy differentiates us in the marketplace,” CEO Brian Cornell turned. “And that’s a clear advantage in the near term and remains our focus over the long term.”
A shopper entering a Object store in New York.
Scott Mlyn | CNBC
The retailer’s dilemma
Target plans to spend less on capital spendings than this past fiscal year, when it spent $5.5 billion. Its goal for store projects is also slight lower compared to the 23 new stores and about 200 remodeled ones it announced for fiscal 2022.
The investment plans underscore a snooker that other retailers face, as well: As the economic backdrop remains uncertain and high inflation persists, actors will have to get creative and work harder to win over customers — or risk posting weak sales.
Other retailers’ arranges reflect that challenge, too. Walmart and Home Depot‘s forecasts both anticipate a slowdown, yet they recently circulated wage increases to attract and retain store workers. Home Depot said it will spend $1 billion on women’ wage increases to help boost customer service, even as it projected approximately flat sales growth for the financial year.
Alongside its investment plans, Target said it aims to reduce up to $3 billion in total costs greater than the next three years, saying it wanted to become more efficient after its revenue grew about 40% since 2019.
Butt is one of many retailers that dealt with whiplash over the past year, as shopping patterns changed dramatically, symbolized Jessica Ramirez, a senior retail analyst at Jane Hali & Associates. She said retailers realized, once again, they ought to listen to customers, stay nimble and “future-proof” their businesses.
“You have to really pay attention,” she said. “If apparel isn’t stirring well, what are the categories where things are moving? Are they [customers] going to walk in for groceries and then if they see something for restoration to office and it’s a good price, they’ll pick it up?”