Executive Briefings

Target's New Online Strategy: Less Is More

Target Corp., under pressure after issuing a dismal profit warning for the year, is narrowing its focus and rethinking its digital strategy, even as competitors like Wal-Mart Stores Inc. invest heavily to diversify their online offerings.

Target's New Online Strategy: Less Is More

The Minneapolis-based retailer has revamped some e-commerce projects, eliminating an in-house startup and implementing new initiatives to save on shipping costs. It has also cut ties with digital partners like Curbside in favor of developing its own programs, and walked away from prospective deals, including an Arizona grocery-store chain and online service Boxed.com, according to people familiar with the talks.

“We’re not trying to be the catalog of everything,” said digital chief Mike McNamara. “We aren’t going to add products to our website and stores just because they exist.”

The company has been squeezed in recent years by Amazon.com Inc. as shopping moves online, and by Wal-Mart, which has remodeled stores and lowered prices. Sales at Target stores open at least a year have fallen for three consecutive quarters. In February, the company said its 2017 profit could be as much as 25 percent lower than Wall Street estimates.

Target’s stock has fallen about 20 percent this year, while Wal-Mart’s has climbed 11 percent and Amazon’s is up 27 percent.

As Amazon and Wal-Mart have expanded into new product categories or bought businesses, Target has been more cautious.

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The Minneapolis-based retailer has revamped some e-commerce projects, eliminating an in-house startup and implementing new initiatives to save on shipping costs. It has also cut ties with digital partners like Curbside in favor of developing its own programs, and walked away from prospective deals, including an Arizona grocery-store chain and online service Boxed.com, according to people familiar with the talks.

“We’re not trying to be the catalog of everything,” said digital chief Mike McNamara. “We aren’t going to add products to our website and stores just because they exist.”

The company has been squeezed in recent years by Amazon.com Inc. as shopping moves online, and by Wal-Mart, which has remodeled stores and lowered prices. Sales at Target stores open at least a year have fallen for three consecutive quarters. In February, the company said its 2017 profit could be as much as 25 percent lower than Wall Street estimates.

Target’s stock has fallen about 20 percent this year, while Wal-Mart’s has climbed 11 percent and Amazon’s is up 27 percent.

As Amazon and Wal-Mart have expanded into new product categories or bought businesses, Target has been more cautious.

Read Full Article

Target's New Online Strategy: Less Is More