Target’s Digital Era Comes With Job Cuts

As retailers like Target focus attention and dollars toward the digital-first era to keep up with consumer habits, it’s likely that shift impacts another segment of the business.

In the case of Target, it looks like that shift will bring about several thousand job cuts, Target CEO Brian Cornell said Tuesday (March 3) during the company’s investor day. He didn’t provide a specific number, but said the restructuring plan is part of Target’s two-year, $2 billion plan to cut costs. This comes during a time Target has also announced its strong focus toward its digital side — including plans to increase in-store sales through a new digital app that enables its “brick-and-mobile” strategy through brand loyalty.

“Following a thorough, strategic review of our business, coupled with a careful evaluation of the changing retail landscape, we have identified the key initiatives that will put Target on a clear path to growth,” Cornell said in a company release. “We’re focused on our future and building the capabilities that will take us further, faster. Redefining Target will require a renewed emphasis on prioritization and innovation, and above all else, putting our guests first in everything we do.”

Spurred by its 40 percent growth in its digital channel sales, and as part of its “roadmap to transform business,” as the company branded the plan, Target will focus on the following areas:

• “A channel-agnostic approach to growing its business, driving a total Target experience across stores, online and mobile. Guests who shop Target in stores and online generate three times the sales compared to guests who shop in stores only.”
• “Create a more guest-centric experience by tailoring its assortment and offering more locally relevant products, with demographics, climate, location and other guest-led factors driving merchandising decisions.”
• “Store opening plans will increasingly focus on new, more flexible formats like TargetExpress and CityTarget, which cater to guests in rapidly-growing, dense urban areas.”

As for the restructuring plans, the cuts are expected to come primarily at Target’s headquarters locations to “focus on driving leaner, more efficient capabilities, removing complexity and allowing the organization to move with greater speed and agility,” the company said.

“While we’re in the early days and there’s no doubt that transformation can be challenging, we’re taking the steps necessary to unleash the potential of this incredible brand,” Cornell said. “I’m encouraged by our early momentum, and am confident that by implementing our strategy, simplifying how we work, and practicing financial discipline, we will ignite Target’s innovative spirit and deliver sustained growth.”

Cornell emphasized during the company’s investor day that it was a “significant cultural change” but said the move was driven by consumer shopping behavior. Following Target’s earnings report on Feb. 25, Cornell gave some stats that backed up the company’s digital direction. This included a 50 percent growth in mobile traffic on the company’s digital products and a 10 percent increase of shoppers using mobile to shop while in store during the holiday shopping period.