Target Still Hopeful For Turnaround As Its Shoppers Spend Less At Store

Image courtesy of Mike Mozart

Americans are still shopping at Target, but they aren’t buying as much as they did before. That’s a huge problem for the retailer, which claims to have some tricks up its sleeve to turn things around.

Customers hoofing it to their local Target are leaving with fewer items than they have purchased in the past, the company revealed in its 2017 first quarter earnings report [PDF], which showed that same-store sales have once again fallen.

But there’s a little bit of good news in Target’s less-than-stellar sales report: Sales didn’t fall as much as expected. Instead, same-store sales declined 1.3%, a marked improvement from the expected 3.7% estimated by some analysts, CNBC reports.

According to Target, the decline in sales at bricks-and-mortar stores was partially buoyed by celebrity collaborations, electronics offerings, and swimwear shoppers.

The company says it saw market share gains across the board in apparel with customers shopping the retailer’s recent Victoria Beckham collaboration line, as well as its new “Shade & Shore” swimsuit collection.

As for electronics, Target says the segment “leaped forward” with the launch of the Nintendo Switch and the recent in-store marketing campaign featuring Mario Kart-themed shopping carts.

The company plans to continue along these lines by introducing new in-house brands, more unique outside brand offerings, and revamped stores.

For instance, Target said it would launch a new in-house baby brand dubbed Cloud Island. The brand follows Target’s previously launched Cat & Jack children’s line and gender-neutral children’s home decor line, Pillowfort.

Additionally, Target will shore up its offering of unique brands previously only available online. Following in the footsteps of its addition of Harry’s razors last year — which eventually lead to half the razors sold by the company coming from Harry’s — Target announced Tuesday that it will begin selling Casper Mattresses online and accessories in store.

It’s not just the products inside stores that Target will change this year, the company will also continue with its previously announced store revamp. The “next generation” stores are aimed at helping customers traverse the giant store more easily, while also encouraging them to, you know, spend money.

Perhaps the largest lifesaver for Target in the first quarter came from online sales. In fact, “digital channel sales” grew 22% in the first quarter, contributing to a 0.8% increase in comparable sales growth.

This, the retailer is expected to capitalize on by “enhancing the digital experience” for customers, including testing a restocking program, piloting a same-day delivery, and offering customers the ability to see what their rooms will look like with Target products in them.

Target says that in the Twin Cities, employees are currently testing “Target Restock,” a program that provides the next day delivery of household essentials ranging from toothpaste to diapers. A test among REDcard-holders is expected to begin soon.

Target will begin a same-day delivery pilot next month. The program allows customers to make a purchase online from Manhattan, Queens, and Brooklyn, and have the Target Tribeca store deliver the products that same day.

The company also recently announced that it would launch 360-degree shoppable rooms on Customers just visit the website, choose one of the company’s curated living room looks, and then place selected products around the room. This, the company says, allows customers to visualize what that new sofa or rug will look like in a room, instead of on the shelf.

Despite Target’s plans for new product lines, increased online offerings, and revamped stores, analysts warn the retailer isn’t out of the woods just yet.

“The road to improvement will be long,” Michael Lasser, a retail analyst for UBS, tells CNBC.

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.