Omni

Target leans into an anti-Amazon strategy after a record sales year

Wednesday, March 3, 2021 by Robinhood Snacks |
_If Target launched streaming: "Let's go with Omnichannel+"_

If Target launched streaming: "Let's go with Omnichannel+"

Bullseye... If you're feeling down, just Google pictures of Target's bull terrier puppy mascot. Target's sales jumped a record 20% last year to $94B. Wild stat: 2020 sales grew $15B+ from 2019 — that's more than Target's total sales growth over the last 11 years. Tarjay says it snagged $9B in sales from competitors. Online order pickup and delivery crushed it: 18% of sales came from digital channels in 2020, doubling from 2019.

Omnichannel is thriving... and thankfully, it's not a new streaming service. Omnichannel = the fancy retail term for a synchronized shopping experience that unites stores, websites/apps, and services. Think: virtually trying on Warby Parker glasses, then picking them up in-store (or vice versa). Target has been working on its omni strategy for years, and stores are a key part of that:

  • 1.9K: Instead of splurging to build warehouses, Target mainly uses its 1.9K US stores as hubs for shipping and pickup (unlike Amazon).
  • 95% of sales came from stores in 2020, including online orders. That sweatsuit you ordered likely came from the Tarjay down the street.
  • $4B: How much Target will invest into brick-and-mortar stores each year to speed up its online-order capabilities.
THE TAKEAWAY

Stores are Target's leg up over Amazon... Target customers who shop in multiple channels (like in-store and delivery) spend ~4X more money on average than customers who shop only in-store — and nearly 10X more than online-only customers. There are cost benefits, too: in 2019, Target's move to store fulfillment slashed costs by 40%. Walmart has been leaning into this strategy, turning some of its 4.7K US stores into fulfillment centers. Stores give Target and Walmart an omni edge that Amazon mostly lacks — especially as people start to leave the house.