Target Aims at Being a Digital Leader

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While Target is pleased it was able to grow traffic in its digital and stores in the second quarter, its digital sales grew 30% from a year ago, just missing the company’s expectations following intense digital promotions.

Brian Cornell, chairman and CEO of Target told analysts in an earnings call that on their list of priorities for the fall is to become the leader in digital.

“This is important because guest research shows that digital relevance drives traffic and engagement across all selling channels,” said Cornell. “While we’re pleased with the industry leading growth we’ve seen so far this year, we have much more work to do and a key asset will deploy is our source. We’re already shipping digital orders from approximately 140 stores and by the end of year we’ll be shipping for more than 450 locations.”

Ship-from-Store capabilities allows Target to balance inventory across the network, leveraging the capital and labor already in the stores and reach customers more quickly.

Target announced it would improve shipping times this fall with its “Available-to-Promise” initiative in which Target will give customers a specific delivery commitment of two to three business days.

“If the guest orders on a specific date, we believe this capability will drive further increases in digital conversion rates which are already improving rapidly as guests respond to a faster and firmer delivery commitment,” said Cornell.

As part of its personalization efforts, last year Target replaced the third party recommendation engine with an internally developed product which incorporates both in-store and online customer history.

Cornell said in 2015, the company has expanded the use of the engine across its mobile offerings, email, subscriptions and cartwheel.

“This engine is driving a meaningful increase in conversion compared with our results on the prior third-party product generating incremental sales of $50 million to $100 million so far this year,” said Cornell. “We’ve rolled out personalization recommendations to Cartwheel only a few weeks ago, but early data indicates the change is driving more than a 10% increase in the number of offers downloaded per users, a critical co-measure of engagement with this app.”

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