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Target testing higher-touch services to spruce up stores

September 17, 2015

Targets Profits Rise 12 Percent In First QuarterTargets Profits Rise 12 Percent In First Quarter
There will be 138 Target Portrait Studios remaining. Justin Sullivan — Getty Images

Target (TGT) might be a discount retailer, but it’s about to go higher end when it comes to in-store service.

The general merchandise retailer, which is undergoing a major reinvention under CEO Brian Cornell, has in the last year added beauty advisors at hundreds of stores to give shoppers makeup and skincare recommendations, and introduced mannequins to better showcase its clothing, two tactics Target has found boosts sales.

But facing a brutally competitive environment for consumer spending, Target in some stores will soon be testing even more new services that seem to come straight out of the playbook of retailers like Macy’s (M) and Apple (AAPL).

For example, the some stores will offer a new fitting room service where a Target employee will provide style advice, while some will have tech-savvy “Digital Service Ambassadors” who will roam the sales floor helping customers engage with Target’s offerings on mobile devices.

While Target has been making a big push to compete digitally with Walmart (WMT) and (AMZN), it is clear that the company is fighting as much with department stores like Kohl’s (KSS) and specialty stores like Crate & Barrel, as it is with its traditional rivals.

And with 95% or so of Target’s current sales still coming from physical stores, that means updated brick-and-mortar operations remain key to its turnaround. That’s all the more important considering everyone, from CVS Health (CVS) to Kohl’s, is training staff to give customers more hands-on attention.

“We absolutely believe that physical stores will be a huge driver of our future success,” CEO Cornell told Fortune during a reporter briefing this week at Target’s national fall meeting.

Target’s comparable sales rose 2.4% last quarter, better than Walmart’s and certainly Macy’s, but hardly a bonanza. So the retailer is pushing hard to reinvent its stores simultaneously with its digital investments.

For example, 200 Target stores have begun presenting home goods in vignettes, which helps customer imagine what different items would look like when put together, à la Crate & Barrel or Pottery Barn, rather than just have items stacked unimaginatively. That will be expanded to another 62 stores by year end. (Target has about 1,800 stores in all.)

And in another move borrowed from specialty stores, one executive told thousands of store managers this week that Target is looking into adding fabric swatches in its home sections. Target also is hiring visual merchandising experts to help improve its product presentation in stores.

Scott Gilbertson

As for the fitting room service, the idea is for Target associates to go beyond keeping track of how many items a customer wants to try on, to actually giving them some fashion tips and help with sizing. Similar high-touch services will be coming to other parts of the store like the beauty, food and swimwear sections, Tyler said.

The many experiments with in-store shopping Target is conducting are taking place in different stores. But starting in a few weeks, Target will bring all its tests together, along with digital efforts like electronic tags that help it track inventory in real time, at 25 stores in metro Los Angeles. (Those Apply-esque digital ambassadors will only be at these so called ‘LA25′ stores.)


Other changes, less obvious to the customers’ eye, are coming that are also designed to improve store service. In 2016, Target will test ways of getting pallets straight from the trucks to the shelves. And it also plans to move more merchandise onto the store floor on a Saturday morning to reduce the problem it’s been having with its bete noire and a major irritant for workers: out-of-stocks. The idea is to free up workers from having to constantly go to backroom to replenish stock so they have more time helping customers on the floor.

“We want to win in the physical stores,” Cornell said.