US Insights

What to Watch From Target's Earnings

Tory Gundelach

Vice President, Grocery

Retail 03.04.2019 / 09:00

TargetStorefront

Target will unveil its annual shifts in its goals and plans.

When it announces its Q4 results on Tuesday, Target will also unveil its annual shifts in its goals and plans. The Kantar Consulting team will be listening for the key headlines regarding the retailer’s capital expenditure plans, strategic shifts, and financial expectations over the next few years. Since Target’s continued efforts to revitalize the business directly impact its vendors, we will also be listening closely for the retailer’s plans in a few key areas: 

Store remodels and new store openings

With the retailer planning another 300+ store remodels in 2019, hoping to fuel growth while it optimizes its discount store and SuperTarget footprint, we will be listening for which initiatives have been working well and which have not. Are the remodels still delivering the 2%-4% incremental lift Target quoted in May as more stores roll through the remodel process? From a store opening perspective, we expect Target to continue focusing on its small format, but how aggressive will it be given the pressures of building out omnichannel assets? 

Private label

Target has had a busy year in private label. With many apparel and home brand launches off and running, will Target put more focus on consumables private label? Smartly, the OPP off-label-looking brand for household essentials, was launched in 2018. Is Target seeing enough incremental business beyond up&up to think about offering a similar brand in food? Will Market Pantry and Archer Farms be replaced like many of the home and apparel brands have been? Archer Farms especially was a standout premium private label brand. However, traditional grocers that have been aggressively investing in this space have caught up to or surpassed Archer Farms. Listen for the direction Target wants to take its consumables brands now that the core business is on solid ground. 

Omnichannel strategy

First and foremost, we will be listening for more details on the newly announced Target+ marketplace, specifically how Target plans to avoid some of the missteps competitors have made in this space. Also, as Target’s various online fulfillment programs expand to reach most of its operating markets, we expect the retailer to do more to help shoppers understand how the methods match different shopper missions. We will be listening for hints about whether the retailer might eliminate or consolidate its fulfillment programs to simplify the shopping process further. Profits should also be a main topic of the omnichannel discussion, with the retailer expecting vendors to help mitigate those issues.

Target Circle

Target has expanded its Target Circle (formerly Target Red) test loyalty program from Dallas to Charlotte, N.C.; Denver; Indianapolis; Kansas City, Mo.; and Phoenix. While that is clearly a good sign for the program’s success, we will be listening for details about the type of guest the program is engaging and the sort of behavior it is driving (such as incremental spend or trips or further digital engagement). If Target shares further expansion plans, that will tell us that current benefits are working. But what does this mean for REDcard holders? Target needs to give guests a clear reason to engage beyond Target Circle.

Source: Kantar Consulting

Editor's Notes

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