Target’s big investments in equipping stores to handle drive-up and in-store pickup of online orders continues to pay off in a big way during the coronavirus pandemic.
On Thursday, the discount retailer said digital sales so far in April have nearly quadrupled, rising 275%, taking some of the edge off a sharp decline in in-store sales caused by restrictions on the number of shoppers Target lets in now to enforce social distancing and protect store workers. In-store sales at stores open at least a year are down by a mid-teens percentage in April.
On some days, the volume of orders retrieved by customers driving up to assigned spots in a Target parking lot have been seven times that of a typical day, while in-store pickup has been twice as busy some days as Cyber Monday, traditionally the busiest day of the year in e-commerce.
“For years, we’ve worked toward using our stores as hubs, and today that is proving absolutely critical in managing record-breaking fulfillment volume,” Target chief executive Brian Cornell told reporters on a briefing.
As detailed in the current issue of Fortune, Target has spent billions on integrating its stores and its e-commerce in recent years, and the company is now reaping the benefits of those investments.
The slowdown in in-store business is largely the result of Target metering the number of people in stores, efforts also undertaken by everyone from Walmart to Home Depot to Whole Foods Market. In some jurisdictions, notably Vermont, essential retailers allowed to stay open for business, such as Target and Costco, have been barred from selling nonessential items such as clothing and toys.
In March, Target saw a surge in business, led by grocery and food sales that had risen 50%. That growth has been more muted in April as U.S. consumers have become more confident in the availability of groceries. But consumers have continued to focus spending on essentials and on merchandise related to shelter-in-place directives: Sales of home and kitchen goods rose, as did “hardline” products, which include appliances and electronics.
Yet, despite the absence of much competition from department stores and clothing chains, which are largely dark, sales of apparel and accessories like shoes and handbags have fallen 40%, a development that will pinch Target’s profits since those products have among the highest margins of any category. Target will report full quarterly earnings next month.
Cornell expressed sympathy for retailers unable to operate stores right now, but nonetheless thinks Target will permanently win some new customers as a result of the coronavirus crisis.
“I certainly expect us to continue to gain share in this environment and be a retailer that the guest is turning to during the pandemic,” he said.
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