Dive Brief:
- Target is making consistency and reliability core tenants of its customer experience, executives said on a Q4 2024 earnings call Tuesday.
- The retailer’s efforts include operational changes to reduce checkout wait times, improvements to stock measurements and additional in-store app features to help translate traffic gains into sales growth.
- “You're going to see us make progress in our inventory reliability and modernize our core supply chain while reducing lead times,” EVP and COO Michael Fiddelke said during the call. “You'll see us bring greater consistency to our store experience and continue to improve our package delivery speed. I'm confident in our ability to deliver on that progress to be faster, more reliable and more consistent than before in 2025 and in the years to come.”
Dive Insight:
Target leaders highlighted the need for rock solid experiences as the foundation for their growth plans.
“Our team is crushing it with real progress made in 2024, but as we assess where we're at, we know two things can be true: We start with a great guest experience, and we aren't where we aspire to be in a world where consumer expectations continue to rise,” Fiddelke said. “We have to deliver even higher levels on things like ease, speed and reliable in-stocks.”
Target’s same-store sales grew 1.5% year over year in the fourth quarter, according to a company earnings report. Net sales were $30.9 billion for the quarter, down 3.1% from fourth quarter 2023, which included an additional week.
Traffic was a highlight for the company. The store traffic rose 2% in the fourth quarter, bringing total growth to 20% since 2019, according to Fiddelke. The uptick translates into 350 million more trips to Target in 2024 than in 2019.
Leaders expect better in-store experiences to help Target take full advantage of its traffic growth.
Investments in faster checkout, including higher staffing levels and adjustments to self-checkout, are already paying off with the highest customer satisfaction levels for speed of checkout in more than three years, according to Fiddelke.
However, he acknowledged that metrics only measure the average over time. Some stores are delivering great experiences on certain days, while falling short on others. Future investments will aim to deliver a more consistent experience and give cashiers more time to interact with customers.
“Now, we know we won't be perfect in every store and every hour of every day,” Fiddelke said. But “we aspire to be, and I'm confident we'll build on this momentum with another step forward in 2025.”
Target is also rolling out new metrics for in-stock rates that will help the company track what customers are actually seeing in stores, rather than how in-stock levels are performing across the chain.
“You don't care about the enterprise average. You just want to know why we don't have your milk,” Fiddelke said. “And so we've rolled out a new suite of measures to help us get more granular in our assessment of our in-stock performance.”
The retailer will invest in the intersection between digital and store experiences as well by adding more features to its app. More than one-third of customers use the Target app in the store and spend nearly 50% more per transaction on average, according to Cara Sylvester, EVP and chief guest experience officer at Target.
“We're currently developing ways to utilize the app to search current Target Circle offers, navigating bargain hunters to where in the store these deals can be found,” Sylvester said. “Or imagine a situation where knowing where you're located in our store, we can customize your app experience to tailor the content based on what you're currently browsing.
