Target plans to double its third party market, its media network and delivery services the same day to generate more than $ 15 billion in income growth over the next five years, he said at an investor meeting in New York on Tuesday.
The retailer’s plans to develop his activities and better compete with competitors such as Walmart And Amazon Come as Target is in an approximate patch, fighting to increase sales of discretionary goods with high margin and recover its competitive advantage.
Target’s shares fell by more than 5% at the start of negotiation on Tuesday after the company published its profits for the fourth quarter of the 2024 fiscal year and told investors that he expected to see a “significant” drop in profits during his current quarter due to soft sales in February. From the end of Monday, the company’s shares are down almost 11% this year.
In the presentation of the company to investors and analysts, Target described a robust growth strategy to recover the so-called Tarzhay magic which has long made a favorite among consumers. The company aims to improve the store experience, to present new exciting products and to invest in its supply chain to make it more efficient.
In prepared remarks, CEO Brian Cornell has praised the company’s plans to develop its third -party market so that it can offer a wider range of items to consumers. The strategy takes out a Walmart page, which sought to imitate Amazon’s model to increase income. The two inherited retailers are turning to digital sales – and the unlimited supply of third -party sellers – like growth paths, because more and more consumers buy online and they lack space to build new stores.
In a press release, Target said that it planned to “widen the size” of its market considerably and to grow third -$ 1 billion digital sales in 2024 to more than $ 5 billion in 2030. However, it adopts a different approach to grow than Amazon and Walmart, emphasizing the majority of the small brand. third -party resellers.
“Rather than opening the doors to any seller, we focus on relevance and confidence by working with partners who complete our assortment and also help us provide more extent that consumers are looking for,” said sales director Rick Gomez.
This includes bringing household names like PelotonDaily harvest and honest baby clothes on the platform.
“To be clear, we always believe that our intentional approach and invitation only is the right strategy, now and in the long term for Target,” said Cara Sylvester, responsible for the guest experience, referring to Target’s strategy to bring sellers to the market. “But that did not prevent us from massive growth. Target more now generates more than a billion dollars [gross merchandise value]Having increased by more than 35% in the past year. “”
Beyond Marketplace, Target will also work to double the size of its internal media company washer by 2030. The company said that this unit led more than $ 2 billion in value last year. This is another strategy deployed by Walmart, which turned to its own internal advertising platform, Walmart Connect, as one of its new paths towards growth.
Beyond these foreign companies, Cornell said that the company will also double the fundamental principles of retail it has been criticized for late: cooler products, altered stores and better stocks.
“There are eternal truths in the retail trade. One of them is that retail concerns the product, and the best product in the best value for money,” said operating director Michael Fiddelke at the meeting. “And when you can find this fantastic combination of novelty, style and value at Target, we win.”
Having a wide range of fresh products is essential to Target’s success and has long been its main competitive advantage. Fans of the company say that we do not enter a target store with a list of races – they discover new products while buying the essential elements for which they came.
Over the past two years, Target has experienced a discretionary sales gap when they have grown up in Walmart, indicating that his assortment is the problem – not a larger macroeconomic problem.
To work to remedy it, Target plans to expand its assortment of games, sports and toys and stimulating its selection of houses, another key and high margin category for the company.
He will also develop his marks possessed with a new series of Good & Gather collaborations, as part of his private brand brand, with famous chefs like Ann Kim. Target plans to unveil 600 new food and drinking items through Good & Gather and Favorite Day, another private brand brand and reorganize its brand of pet supplies, Boots & Barkey.
The company aims to repair its supply chain to reduce the time necessary to design, find and obtain products on the shelves so that it can respond more quickly to trends and better compete with Chinese e-tailers like Shein and Temu.
It plans to invest between $ 4 billion and $ 5 billion in stores, the supply chain and technology to reduce stocks and implement new delivery methods to increase delivery speeds. These investments will include the modernization of the business management system inherited from the company with “technological solutions fueled by AI,” she said in a press release.
“We know that there is no Tarzhay magic if you do not find the article you are looking for because we were out of stock or that we did not delight you in store,” said Fiddelke.
It also plans to open 20 new stores, the majority of which will be large formats and invest in renovations in the fleet.