Offering a “safe haven” of sorts after multiple retailers unsettled investors, Target Corp. increased its full-year outlook on profitability as well as strong sales. Online sales jumped 31 percent in the quarter, yet eCommerce didn’t weigh on profitability as it has done in past periods, Bloomberg reported.
Target’s online shopping investments, including the launch of curbside pickup and same-day deliveries, have bolstered sales and brought in new consumers who didn’t shop there in the past, while helping to keep Amazon at bay. The retailer has also doubled down on toys during the holiday season by fulfilling sales made on a relaunched Toys R Us website and bringing over 24 mini-Disney stores inside some of its locations.
The holiday season could be less than stellar for merchants, per Bloomberg Economics. Sales are forecasted to increase by only 3.4 percent. And Target, as well as others, have reaped the rewards of the downfall of Toys R Us. However, the selling season is shorter this year, with six fewer days from Thanksgiving to Christmas in comparison to last year. As Target CEO Brian Cornell has said, per the outlet, “every day counts.”
When it comes to eCommerce, CNBC reported that it has been a concern with investors as well as analysts when merchants start selling more online, as those sales carry higher costs to deliver orders and are less profitable. However, as Cornell told the outlet, “When it’s delivered by our stores … those look a lot more like store economics.”
He noted that “about 40 percent of the cost goes away” when Target fulfills an eCommerce order from the back of its stores instead of shipping from a distribution center. And when customers order through the web and pick up at a location, request shipping through Shipt or use curbside pickup, “about 90 percent of the cost goes away.”