Target’s Digital Sales Jump 200% As Consumers Avoid In-Store Shopping

TOPLINE

Even as many consumers avoid in-person grocery shopping out of coronavirus fears, the ubiquity of big-box retail locations is allowing retailers to turn the corner store into a fulfillment center, with Target Wednesday reporting a nearly 200% increase in digital sales in the second quarter, but noting that 90% of fulfillment came from stores.

KEY FACTS

For the quarter ending Aug. 1, the Minneapolis-headquartered retailer said total revenue of $23.0 billion was up 24.7% from last year, while profit nearly doubled, gaining 80.3% to $1.690 billion.

The retailer also saw same-day services — order pick up, drive up and Shipt — leap by 273% compared with a year ago; sourcing methods that rely on retail staff and third-party delivery services to pick up items from within the store.

The boost in “bricks and clicks” selling helped Target post a 24.3% increase in comparable sales — a key measure of chain health— marking the largest percentage jump the company’s ever reported.

On balance, retailers  that have been able to nimbly migrate customers to online selection and from-store delivery have fared better than those still relying heavily on foot traffic, as everyone scrambles to find a way to compete with Amazon, which uses its Whole Foods brand as a grocery delivery source.

Kroger, the largest traditional grocer, is three-months into a test of a Prime-like grocery subscription service with Instacart; and Walmart, which Tuesday reported a 97% jump in e-commerce sales, is planning to launch its own version, Walmart +.

key background

Before the pandemic, many consumers were slow to embrace online grocery shopping, especially for produce items.  But the nationwide sweep of the coronavirus pandemic forced many to embrace the model as enforced social distancing measures and fear prompted many consumers to stay at home. That’s lead to a race between Amazon, Target, Walmart and traditional grocers like Kroger to find the right combination of price, speed and convenience. That’s also been a boon to third-party delivery services, even as they struggle with how to keep their “essential” workers safe.

further reading

Kroger Tests Prime-Like Subscription Delivery Service To Court At-Home Shoppers (Forbes)

Target reports second-quarter earnings (Target)

Grocery Shoppers Fuel Huge Boost In Amazon Sales (Forbes)

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