Same-Day Delivery Drives Another Ecommerce Surge in Q3 for Target

Target’s strong third-quarter performance, with 31% growth in ecommerce sales coming in just shy of the 34% growth posted in Q2, continues the trend of same-day order fulfillment services driving growth.

“Within our digital sales, 80% of our third quarter growth was driven by same-day fulfillment options, in-store Pick Up, Drive Up and Shipt,” CEO Brian Cornell said on a call with analysts. “Given that these same-day options rely on our store assets, team and inventory, they are much more profitable than traditional ecommerce fulfillment.”

Target is the first retailer to offer curbside pickup in all 50 states, and with this holiday season Shipt offers same-day delivery in as little as one hour via target.com and its app. In Q3, sales volume fulfilled by Shipt grew more than 100%, and Drive Up grew by more than 500%.

Total revenue was $18.7 billion, up 4.7%, reflecting comparable sales growth of 4.5% and a 3.1% increase in comparable traffic.

“Notably, this year’s digital growth was on top of a 49% comp increase last year,” Cornell said. “While these numbers add up to 80%, when you’re talking about growth rates of this magnitude, the power of compounding really matters. Specifically, when you do the math, you’ll see that our third quarter digital comp sales have actually grown more than 95% over the last two years. … well ahead of our expectations.”

The company also reported:

  • Comparable sales are up nearly 10% over the last two years
  • Q3 comps growth reflects 2.8% growth in stores and a 1.7% contribution from digital sales
  • Q3 operating income grew 22.3%
  • Apparel saw the most dramatic share gains in the quarter, with comp sales growth of 10%+, driven by even stronger trends in jewelry, accessories and shoes, intimates and sleepwear, young contemporary and women’s ready to wear

Target’s launch of new brands, products and services continues with Good & Gather, a food and beverage brand centered on healthier products. Set to reach 2,000 items by the end of 2020, it’s just one place Target is going head-to-head with Amazon and Walmart.

The company announced a collaboration with Disney that installed 25 Disney stores in select Target locations in October, with an expansion to 40 additional stores in 2020 and a new Target location at Walt Disney World in 2021. With Toys R Us leaving the marketplace in 2018, Target, Walmart and Amazon aggressively ramped up their footprint in the space. In Q3, Target saw “continued growth in toys, offset by comp sales decline in electronics and entertainment,” Cornell said.

The loyalty program Target Circle launched nationwide in October and already has more than 35 million members, which Target says makes it the nation’s fastest growing loyalty program.

Leave a Reply

Your email address will not be published. Required fields are marked *