Target expands delivery, boosts wages amidst earnings report criticism

| by Judy Mottl
Target expands delivery, boosts wages amidst earnings report criticism

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On the heels of criticism regarding its latest quarterly financial report Target is expanding delivery service, increasing its minimum wage, and CEO Brian Cornell is more than optimistic about its long-term strategy to innovate and compete.

Target's free two-day shipping is now available to hundreds of thousands of items. A new 'Drive Up' service, via the Target app, lets consumers swing into Target locations to pick up online orders. Target is expanding its flat-fee delivery of in-store purchases to guest's homes into more New York areas and select stores in Boston, Chicago, San Francisco and Washington, D.C. The retailer is also boosting its hourly wage to $12 this year, a dollar bump over 2017, and aims to hit $15 by the end of 2020.

Each and every move is part of Target's multi-year quest to drive an elevated experience for guests and make Target "the easiest place to shop," said Cornell in a press release.

The retailer, which is in a three-way industry battle with Amazon and Walmart, plans to triple its store remodel program this year, update more than 300 U.S. stores and open 30 new stores as well — mostly in urban and suburban areas and college campuses.

In a live interview Tuesday, with Courtney Reagan at CNBC, Cornell made it clear he is more than enthusiastic and optimistic when it comes to Target's strategy and goals.

"2017 was a year I'm really proud of and I'm proud of the team," he said. "We see great growth from a digital standpoint and rolled out great new brands."

That optimism comes despite street backlash over its latest quarterly financials. While comparable sales grew more than 4 percent in January, and 3.6 percent overall in the fourth quarter, Target just barely missed analysts' expectations on earnings and some analysts criticized the retailer's increased capital expenditures program.

In response Cornell countered sales and growth expectations were better than predicted, noting digital sales grew 3.6 percent and digital sales growth hit 29 percent.

"We finished with really strong results," Cornell told CNBC. "We actually exceeded the midpoint of our guidance, beat the number by two cents. So, I feel really good about our performance and we're going to continue to invest to grow."

The positive sales figures illustrate that Target's strategy is working, he added.

"We are on a trajectory for positive growth, both in store and online. Our new initiatives are being well received so I think we're going to continue the progress we made in 2017 throughout 2018. We're just going to continue to execute our game plan through 2018."

That game plan is a three-year $7 billion initiative, announced in 2017, that is supporting new stores, store revamps, and expanded fulfillment capabilities. It's also helping to drive team training and development.

"I think the biggest investment we have made over the last year, and the most important one, has been with our team," Cornell told CNBC, notingTarget is now operating under a new model aimed at enhancing its visual merchandising and driving a great customer experience.

The goal is to meet the needs of the in-store consumer, the shopper in the car picking up items and the growing number of online guests. Cornell told CNBC the higher wage will help attract needed talent to support new store elements. Target will be hiring this year to provide customers more expertise in apparel, home, beauty and food and beverage store departments.

"I want to be an employer of choice and it all comes down to the team," Cornell said. "We're operating differently but focused on meeting the needs of today's consumer."

Topics: Customer Experience, Customer Service, Department Stores, eCommerce, Financial News, Hiring and Retention, Merchandising, Omnichannel / Multichannel, Online Retailing, Retail - Apparel, Store Design & Layout, Supply Chain, Technology, Top 100 Retail, Workforce Management

Companies: Target

Judy Mottl

Judy Mottl is an experienced editor, reporter and blogger who has worked for top media including AOL, InformationWeek and InternetNews. She’s written everything from breaking news to in-depth trends. She loves a great pitch so email here, follow on Twitter and connect on LinkedIn.

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