It’s a new era of retail, and our guests are shopping in different ways. They’re using digital more than ever, and seeking retailers that make shopping easy, intuitive and fun. That was all top-of-mind at our financial community meeting earlier today, where CEO Brian Cornell, COO John Mulligan and CFO Cathy Smith shared an overview of Target’s plans for the future. The big news of the day? We’re investing more than $7 billion in capital over the next three years, and about $1 billion in annual operating profits beginning in 2017, to grow sales faster, gain market share, adapt to guests’ rapidly changing preferences and give them even more reasons to choose Target.
“We’re investing in our business with a long-term view of years and decades, not months and quarters,” Brian said. “We’re putting digital first and evolving our stores, digital channels and supply chain to work together as a smart network that delivers on everything guests love about Target, including more than a dozen new brands we’ll introduce over the next two years. We’re confident our strategy meets the challenges of today and will lead us well into the future.”
Enhancing our digital experience
Digital leads the way. We’ve grown our digital infrastructure to increase speed, stability, performance and capacity, doubling our digital sales from 2013 to 2016, and we’ll continue to accelerate our efforts. For example, later this year, we’ll provide guests with a streamlined experience by combining Cartwheel—our popular savings app—with our flagship Target app, offering guests one simple shopping solution.
Reimagining our stores
Our stores continue to play a critical role. They’re places guests go to discover and be inspired, and they’re a huge advantage because they put us close to our guests. In fact, three quarters of all Americans live within 10 miles or less of a Target store.
Over the next three years, we’ll reimagine more than 600 locations. That’s great news for guests stopping by their local store for a new outfit or picking up tonight’s dinner, but it’s even more important to enabling a digitally connected Target experience. That’s because the stores will both look and function differently. Case in point? Ship from Store: No longer are our backrooms just storing products until they’re ready to move to the sales floor. These backrooms double as hyperlocal distribution centers, allowing us to ship orders to our guests from their own backyard. It’s a win-win: Guests get their orders faster, and we’re operating more cost effectively. By 2019, all Target stores will have this capability. That’s on top of Order Pickup, a guest-favorite service that’s already available in all stores.
And we’re putting new tools in the hands of our store team members that will help guests check every item off their list. Shopping in a store and can’t find your size? We’ve got you covered. This June, we’re rolling out new technology that allows team members to search our inventory, take payment from a mobile point-of-sale system and arrange delivery—all from the sales floor. It’ll be in all stores by the end of this year.
Opening small format stores
Speaking of stores, we’re opening 30 small format stores in 2017, doubling our presence in dense urban markets and on college campuses. These stores serve as neighborhood hubs for guests to pick up online orders, bringing added convenience to their “Target runs.” They also help us reach guests in areas we couldn’t before, and connect with college students at a time when they’re developing brand preferences. By 2019, we’ll operate more than 130 small format stores.
Introducing exclusive brands guest will love
And don’t forget about great products. They’ve always been the star of our show, and a big reason Target stands out to our guests. We’ve learned from launching brands like Cat & Jack and Pillowfort how new brands that truly resonate can help us capture bigger pieces of the market. So we’re upping our Tar-zhay game across our brand portfolio: In the next two years, we’ll introduce more than 12 new exclusive brands across our apparel and home departments, helping grow our most profitable categories and giving guests even more reasons to love Target.
Offering competitive prices every day
Who doesn’t love a good deal? We know our guests do, and we want them to feel confident that they’re making the most of their dollar when they shop at Target. Over the years, we’ve piled on the promotions. Now we’ll get back to increasing our focus on offering competitive prices across our entire assortment every single day. Our investment in our operating profits will help us pass along the savings to our guests, but bigger picture: More guests will rest easy knowing that Target isn’t just a great place to shop, it’s a great place to shop the best prices.