digibyte - Target's digital holiday season paid off

Stuart Lauchlan Profile picture for user slauchlan February 24, 2016
Summary:
Target turned in digital growth numbers to keep Wall Street happy, but the devil's in the detail and that's not entirely clear just yet.

Target

That’s what you call a digital holiday season! US retail chain Target’s reported that online sales grew 34% over the 2015 holiday period were attributable to digital spend.

Compare that to Walmart’s 8% and you get some idea that while Target’s overall revenues fell short, the digital investment is paying off.

More importantly for Target, the digital spend was up 14% on the previous quarter, halting two quarters of slowing online sales.

But it’s not all good news. The target (sorry) set for full year digital growth was 40%, so the actual figure of 31% fell short. And online sales still only account for 5% of Target’s overall revenues.

The firm saw strong ‘bricks and clicks’ benefits over the holiday period, with stores fulfilling 30% of digital orders through the combination of order pickup and ‘direct-to-guest shipments’ on Black Friday, while Cyber Monday saw a record level of order pick-ups in-store.

That allows CEO Brian Cornell to boast:

Strong Black Friday and Cyber Monday weeks drove this increase. In fact, after setting a new digital daily sales record in the week of Black Friday, we shattered all previous records on Cyber Monday. Our offer was broad and simple, 15% off everything on our site. And the guest response was exceptionally strong. Our holiday season merchandising and marketing plans were focused on delivering broad, simple and compelling offers like our 10 Days of Deals, Black Friday doorbusters and the site wide offer on Cyber Monday, and the bounce back coupon we offered to guests in our stores on Black Friday, all supported by cohesive marketing plans featuring outstanding creative work.

My take

Wall Street liked the numbers it heard well enough. There’s a lot of the strategic direction that still needs unpicking though, which Cornell and his team, including new CIO Mike McNamara, will attempt to do next week at a briefing in New York. We’ll check back in after that.

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