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Retail Foot Traffic Resurgence: Target Q2 Brick-And-Mortar Traffic, Sales Gains Point The Way

Target's 6.4 percent traffic growth in Q2 was "better than we’ve seen in well over 10 years," said Brian Cornell, chairman and chief executive officer of Target Corporation.

Talk about the retail apocalypse and the supposed demise of malls may continue to be bruited about, but the signs of life for store brands — and even malls — are providing a more balanced, if not robust, picture of the state of retail.

Case in point: Target’s Q2 numbers that were released on Wednesday suggest that the roughly 90 percent of consumers’ transactions that occur in physical places, as opposed to e-commerce, are not mostly comprised by grocers and restaurants.

Among the highlights of Target’s report:

  • Traffic growth of 6.4 percent is by far the strongest since Target began reporting traffic in 2008.
  • Comparable sales increased 6.5 percent, the best comp at Target in 13 years.
  • Comparable store sales grew 4.9 percent.
  • Comparable digital sales grew 41 percent, on top of 32 percent growth a year ago.

Target’s string of positive numbers comes as the National Retail Foundation notes that July retail sales were up 0.4 percent seasonally adjusted from June and increased 4.9 percent unadjusted year-over-year, giving the industry a solid kickoff for the third quarter as consumers continued to spend despite concerns about the growing trade war. The numbers, which exclude automobiles, gasoline stations and restaurants, show that while stores have faced unique challenges in the last few years, retailers are learning the right lessons from e-commerce.

Finding The Right Balance Between Online And Offline

The investments that Target has been putting into ensuring that online/offline commerce are complementary instead of competing has resulted in a steady positive trajectory.

Digital services that have been particularly successful in helping Target thrive in the age of e-commerce have included curbside pickup and Target’s somewhat surprising acquisition of transportation tech company Grand Junction in Aug. 2017 and delivery service Shipt the following December have helped it keep its promise on same-day delivery to customers.

Beyond working to compete with Amazon and other e-commerce retail rivals on fulfillment, Target’s also trying to find ways to add other digital touchpoints designed to enhance convenience between online and offline channels.

Target’s integration of virtual coupon-clipping tool Cartwheel into its branded  app was part of that strategy. That idea was ultimately extended with the addition of its credit card — known as REDcard —  into the app with a new wallet feature along with the promise of savings to boost its loyalty/rewards program.

Early Retail Tech Experiments Pay Off

In the first quarter, more than two-thirds of Target’s digital volume was fulfilled by our stores, up from about 50 percent last year, noted Target COO John Mulligan.

“Of that store fulfilled volume, store pickup continued to account for about 15 percentage points, while ship from store volume has grown to more than 50 percent,” Mulligan told analysts during the Q2 earnings call (transcript available via Seeking Alpha). “We have more than 1,400 stores shipping directly to guests’ homes today, and we continue to retrofit store backrooms to enable additional capacity.”

That success all goes back to Target’s decision three years ago to aggressively explore emerging tech related to retail has allowed it to reasonable lay claim the over-used word “innovative” in terms of its approach.

Target is trying to make even dishwashers eye-catching to younger shoppers.

Matching The Virtual And Human Touch

For example, in October, Target became one of the first major brick-and-mortar brands to accept spoken requests made by owners of the Google Home through its voice-activated Google Assistant (aka “Okay, Google”) for delivery or pickup via its local online shopping marketplace Google Express.

Conversely, Target has also acted quickly to reject cool-seeming offerings that didn’t pay off, such as in the case of its former beacon program and the decision decided to abandon its sub-rosa e-commerce program called Goldfish, which was once positioned as the “store of the future.”

“For the second consecutive quarter, traffic growth is better than we’ve seen in well over 10 years, driving 6.5 percent comp growth – Target’s best in 13 years,” said Brian Cornell, chairman and chief executive officer of Target Corporation.”We laid out a clear strategy at the beginning of 2017, and throughout this year we’ve been accelerating the pace of execution.”

Cornell expanded on that strategy later in the call.

“Being different means always changing,” Cornell said. “Right now, we’re investing to deliver differentiation that matters in today’s world, focusing on convenience, digital brands, our operating model, small formats, and the look and feel of existing stores. And we’re investing in our greatest differentiator, our team, because human touch still matters even in a digital world.”

About The Author
David Kaplan David Kaplan @davidakaplan

A New York City-based journalist for over 20 years, David Kaplan is managing editor of GeoMarketing.com. A former editor and reporter at AdExchanger, paidContent, Adweek and MediaPost.