Target’s first comparable stores sales decrease in two years is partly due to the retailer’s problems with actually selling groceries, but the drop also reflects problems with the national retail landscape as a whole. Target expected sales to increase slightly, but instead, Americans are apparently paying for experiences rather than stuff, heading to buy clothes at off-price stores, and buying supplies to remodel our homes.
At least, that’s how things look when you look at the retail landscape as a whole, since off-price clothing and home goods retailer TJMaxx and construction and appliance store Home Depot reported their results the same day as Target. The three chains could share a strip mall plaza, but shoppers and their wallets are clearly bypassing Target. Why?
CEO Brian Cornell noted in a conference call with investors and reporters that one factor is the pharmacy shift: as Target changes over to having its in-store pharmacies run by CVS, the chain experienced “some disruptions.” (We’re curious what that might actually mean in real life: if you’re a former Target Pharmacy customer who left when CVS came in, drop us a line.)
Another factor was a drop in electronics sales, with sales of Apple products dropping 20%. Why? Has the American middle class finally become saturated with iPads?
First sales drop in two years sends Target execs scrambling for answers [Minneapolis Star-Tribune]