When it comes to thriving in today’s challenging retail environment, Target’s executives have made it a top priority to listen to – and deliver on – what their customers truly want. Target CFO Michael Fiddelke shared with a packed theater at Shoptalk in Las Vegas on March 26 why the retailer remains focused on a great in-store shopping experience for its guests and how being a people-first organization has positioned it well for growth.
With consumers who are still clearly feeling the impacts of inflation, Target has seen its shoppers become increasingly sensitive to promotions, and also dial back on spending in discretionary categories, Fiddelke explained. While this has been the case, today’s consumers are also leaning into newness within Target’s stores and product mix.
Fiddelke also discussed three main areas of investment that were shared during Target’s recent investor call and release of its Q4 and FY22 financial results, including new merchandise, new experiences and faster delivery. For Target, delivery speed pertains to not only fast product shipping, but also the ability to efficiently serve same-day delivery and pickup customers.
According to Fiddelke, drive-up has proven to be the hallmark of Target’s same-day services, with guests viewing it as perhaps the most convenient of all the ways to shop.
“The thing that I think is most remarkable, and I would’ve gotten this wrong before we launched drive-up, is that when people engage in different ways of shopping, your spend at Target increases meaningfully in total, and also your store spend goes up too,” Fiddelke explained. “It’s just such a deepening of the relationship with Target when you make it easy for guests to shop however they want.”
Continued Fiddelke: “In my time in this seat, it has been proven time and time again that when we solve the right guest problem, when we listen to our consumer, they’ll give us the right path to go down.”
That path has led Target to deepen its relationship with guests even more as it prepares to roll out drive-up returns across its entire footprint by the end of summer, and also offer order-ahead Starbucks for its drive-up customers.
Another path Target has strategically leaned into is putting its stores at the center of everything it does. While the retailer’s digital business is approaching nearly 20% of its sales mix, more than 95% of everything it sells comes through a store, offering a significant level of fulfillment flexibility.
Fiddelke also discussed Target’s people-first technology approach, with tech enhancements and investments being driven by a desire to make the guest shopping experience easier while also helping associates do their jobs more efficiently. The company also has plans to launch or expand 10 private-label brands, which Fiddelke said is imperative for gaining customer preference and loyalty to Target.
At the end of the day, Target continues to make investment decisions based on long-term goals, whether it has to do with technology, store growth or its team members. The company will continue to remodel stores to give customers the most up-to-date experience the retailer has to offer, build new ones in different market areas, and also invest in its people.
“When we get it right for our guests and we do things like drive the traffic increases that we’ve seen over the last few years, that’s good for everybody,” Fiddelke said. “That means we’re getting it right for the guests, that means we’re able to lean into those own brands, and all our important long-term vendor relationships love to see that growth, too.”
Shoptalk takes place March 26-29 at the Mandalay Bay in Las Vegas.
Minneapolis-based Target Corp. is No. 6 on The PG 100, Progressive Grocer’s 2022 list of the top food and consumables retailers in North America, with nearly 2,000 locations.