Target’s Efforts To Bring Customers Back Are Starting To Pay Off

Image courtesy of Mike Mozart

For the last year or so, Target, America’s other national big-box discount store, has been struggling. Its leaders blamed falling sales on shoppers renovating their houses, on lower traffic to pharmacies after they were sold to CVS, and on customers’ general disinterest in shopping. In the last year, Target refocused on fundamentals instead of retail innovations, and that has paid off in more customer traffic and improved sales.

Across the chain, same-store sales were up 1.3%, a bigger increase than the company expected. That’s good news, but the company is trying to plan ahead, remodeling stores, opening small-format stores, and creating new brands that might interest customers. The chain found that the average basket, or amount that each customer spends during each visit to the store, was down, but that was a good thing, since the same shoppers were visiting stores more often.

Pharmacy Turnaround

Last year, Consumerist readers told us that it was the sale of Target’s pharmacies to CVS that led them to stop visiting the chain’s stores as often.

“The conversion of our pharmacies created some inevitable friction for our guests, driving an initial decline in script count” since that initial period, Tony Costanzo, senior VP for stores, explained during today’s earnings conference call with analysts.

Costanzo says that the two companies have been working together to get Target shoppers back into pharmacies. Now he reports that customers are giving the pharmacies higher satisfaction scores since before the in-store pharmacies switched to CVS, and the total number of prescriptions that Target fills has started increasing again.

(CVS, however, still has no plans to bring the beloved red prescription bottles back, to Target’s in-store pharmacies or to its own.)

“Challenges of urban living”

Looking to the future, Target is investing in new brands, including a new home collection designed for “the challenges of urban living,” which means functional modern design and products designed for people who move frequently.

This collection makes sense for the company’s new focus on small-format urban stores, including stores specifically designed for city neighborhoods as well as for college campuses. The company is also partnering with Barnes & Noble College, operator of college bookstores on hundreds of campuses.