- Target’s ecommerce business soared in Q4.
- But it may need to shift its focus back to in-store retail to maintain its growth trajectory as pandemic conditions continue improving.
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Target’s comparable sales grew 20.5% year over year (YoY) in its fiscal Q4 2020 (ended January 30, 2021), with total sales reaching approximately $28 billion.
The retail giant continued to experience massive digital sales growth thanks to the pandemic-driven online shopping surge, with the metric surging 118% YoY to reach a value of $6.19 billion. Target’s impressive Q4 growth is a stark difference compared with the same period in 2019, when the firm’s total sales grew only 1.5% YoY and digital sales rose 20% annually. Though Target’s recent holiday results helped shape a successful Q4, the retailer saw significant post-holiday volume in January from consumers redeeming gift cards and purchasing from its new product assortments.
Insider Intelligence details how Target’s 2020 success can be attributed to efforts that helped it meet evolving consumer shopping needs during the coronavirus pandemic.
- Target’s click-and-collect offerings allowed it to boost ecommerce sales volume. The retailer’s same-day services, including order pickup, Shipt, and curbside pickup, grew 212% YoY, with the latter alone surging 500% annually. These measures allowed Target to speed up ecommerce fulfillment and make it more convenient for consumers to shop online during the pandemic—helping it grow digital sales by nearly $10 billion in 2020. Moreover, Target used its store network to fulfill orders throughout the year: In Q4, 95% of all sales were fulfilled by its stores, for instance.
- And its updated store processes helped accommodate shoppers during the crisis. At the onset of the pandemic, Target introduced updated store guidelines that included enhanced cleaning measures and reduced shopping hours. And ahead of the holiday shopping season, the retailer launched an online reservation system that let customers reserve time slots to shop to avoid waiting in line outside the store. Despite in-store traffic likely remaining low compared with prepandemic levels, these in-store measures might’ve helped Target recover some sales volume.
But with pandemic conditions improving, Target may need to refocus efforts on in-store shopping to maintain its growth trajectory going forward. Although ecommerce will probably remain a key part of Target’s business, the firm is unlikely to maintain the rate of growth it saw in 2020 because the pandemic led to an unprecedented online shopping surge that helped uplift total sales: In Q4 2019, digital sales accounted for 12.3% of Target’s total sales, but a year later that figure rose to 22.1%.
It’s also worth mentioning that many online consumers likely turned to ecommerce out of necessity during the crisis, but now that vaccines are rolling out, they may be more inclined to shop in-store. To boost sales as the pandemic subsides, Target can continue to build out in-store offerings to entice consumers, which it has already been doing: It introduced Ulta beauty counters to select stores in November, and it recently said it would double the amount of in-store space dedicated to Apple products.
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