In 2018, Target invested in restructuring its stores to better fulfill online orders and launched 20 of its own brands.

Target CEO Brian Cornell says the retailer’s investments in using its stores to better fulfill online orders and launching 20 of its own brands are paying off.

 Cornell, speaking to attendees at the National Retail Federation 2019 conference in New York City in January  said Target is making good on its plan to invest $7 billion in its stores. That investment includes launching smaller format stores in urban areas and college campuses or reformatting current stores to be better equipped for shoppers to pick up online orders and have the backroom be used to ship out products.

So far, these investments are paying off as some of its smaller format stores are its “most productive stores,” Cornell said, and stores helped fulfill 75% of online orders during the holiday season, whether that was ship from store, buy online pick up in store or curbside pickup.

A lot has changed in the last 10 years in terms of how Target uses its stores, Cornell said. A decade ago, “we couldn’t build fulfillment centers fast enough to compete with Amazon,” Cornell said. But instead of going that route, Target instead decided to view its network of 1,800 U.S. stores as fulfillment centers, make them work harder and invest more in them, Cornell said.

“Today, we consider stores our single biggest competitive advantage,” Cornell said.

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“[Within the past 10 years], digital has moved from a rounding error to an essential part of the consumer expectation,” Cornell said.

In terms of launching new brands, Cornell said Target didn’t want to dilute a brand by making it appeal to a wider audience but instead developed  new brands that appealed to shoppers with different tastes. For example, within the home category, Target has the Threshold brand, as well as new brands Project 62, Opalhouse, Made by Design and Hearth and Hand, which all appeal to different aesthetics. Shoppers don’t care that Target has new brands; they care about value, quality, design and newness, which these brands offer, he said.

“Now, we are seeing consistent market share growth and appealing to new customers,” Cornell said. “We are growing market share and growing in every one of our major categories.” 

Typically launching so many brands would take three to five years, but Target compressed that to 18 months. 

Target is No. 17 in the Internet Retailer 2018 Top 500.

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