eCommerce Strategy Consultant - Rick Watson - RMW Commerce Consulting

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Target Continues Its World-Class Execution Led By Same-Day Services Growth

#Target continues its WORLD CLASS EXECUTION In Q3 Earnings Led By SAME DAY SERVICES GROWTH

1 - Leadership and Priorities Set the Tone

- Everything starts here. There is one set of small enterprise-wide priorities on the things that matter. This enables better execution and collaboration.

- In contrast to many companies where the "list of priorities" number in the dozens.

- You cannot collaborate across departments without enterprise-wide priorities, period.

2 - Significant Growth in Same Day Services

- Same day up 60% on top of 200% year ago.

- Driveup/curbside leads increased 80%, on top of 500%+ year ago.

- Supply chain mix materially shifting: ship to home declined slightly. "Meaningfully more profitable than ship to home."

- In store pickup + Shipt up 30%

Target has written the playbook on the modern retail supply chain over the past 5 years. Now it's up to Amazon and Walmart to follow it.

This is on top of ---- - Stores comp sales 9.7% on top of 9.9% last year. - Digital comp 29% on top of 55% a year ago.

3 - More Profitable Than Its Peers, and Pulling Away

- Target moved to 8% operating profit margin from 7% in 2020. -- Contrast with Amazon at flat to -1% Retail Margin -- Contrast with Walmart ~3% retail margin

- 95% of all shipments handled from stores (digital+sameday)

- Due significantly to lack of markdowns (smart merchandising, inventory), best-in-class hiring practices (more hours for current workers, hiring successes), and leverage due to same day services (significantly more profitable than traditional ecom)

4 - Best in Class Hiring Practices

- Store worker hiring targets on track

- Existing workers being bonused + working more hours as planned

- Store turnover - particularly with new workers - down.

- Adding 30k permanent supply chain roles into next year.

WRAPUP:

You wonder why Amazon is getting more into physical #retail? It's not much of a mystery. Operating Profit Margin.

IMO Target is not only kicking sand in the face of investors looking to split digital + physical, it is digging a grave for them and kicking them into it.

#ecommerce