Target Plans to double revenue growth in its third-party markets, media networks and same-day delivery services said in a New York City investor meeting that plans to double its revenue growth by more than $15 billion.
The retailer plans to grow its business and compete better with its competitors Walmart and Amazon As Target finds its own difficulties, strives to increase sales of high-profit discretionary merchandise and restore its competitive advantage.
Target’s shares fell more than 5% earlier on Tuesday after the company issued its fourth-quarter earnings for fiscal 2024 and told investors Soft sales in February. As of Monday’s end, the company’s shares fell nearly 11% this year.
In the company’s introduction to investors and analysts, Target outlines a powerful growth strategy to reclaim what’s called Tarzhay Magic, a strategy that has long made it a consumer favorite. The company’s goal is to improve the store experience, introduce new and exciting products and invest in its supply chain to increase its efficiency.
In a prepared speech, CEO Brian Cornell touted the company’s plan to grow its third-party marketplace to provide consumers with a wider range of items. The strategy removed a page from Walmart, which has mimicked Amazon’s model to boost revenue. Both old retailers are turning to digital sales, as well as unlimited supply from third-party sellers – as more consumers shop online, they exhaust new stores, becoming a path to growth.
Target said in a press release that it plans to “significantly expand its market size” and increase third-party digital sales from approximately $1 billion in 2024 to $5 billion in 2030. However, it takes a different approach compared to Amazon and Walmart, which places more emphasis on the small third and third-party major brands than small brands.
“Instead of opening the door with any seller, it’s better to build relevance and trust by working with partners that complement our classification and can also help us provide more of the breadth consumers are looking for,” said Chief Business Officer Rick Gomez.
This includes introducing household names Pelotonharvest and honest baby clothing every day onto the platform.
“To be clear, we still think that our approach to invitations is the right strategy, both now and for a long time,” said Cara Sylvester, Chief Guest Experience Officer. “But that hasn’t stopped us from a huge growth. Target Plus now generates over $1 billion (total commodity value), which has grown by more than 35% in the past year alone.”
In addition to the market, Target will double the size of its in-house media company Roundel by 2030. The company said the unit was worth more than $2 billion last year. This is another strategy deployed by Walmart, which has turned to its own in-house advertising platform, Walmart Connect, which is one of its novel growth paths.
Cornell said that besides these irrelevant businesses, the company will double its criticism of retail fundamentals as it lags behind retail fundamentals: fresh products, remodeled stores and better stocks.
“There are some eternal truths in retail. One of them is that retail is about products, and the best product of best value wins,” Chief Operating Officer Michael Fiddelke said at the conference. “When you find the great combination of novelty, style and value of your goal, we win.”
Having a wide range of fresh products is key to Target’s success and has long been its main competitive advantage. Fans of the company say a person won’t go into the target store with a shopping list – they discover new products when they buy the essentials they need.
Over the past few years, Target has seen a disposable sales lag when it grew up at Wal-Mart, suggesting that its classification is the problem rather than the larger macroeconomic problem.
To address this, Target plans to expand its gaming, sports and toy classifications and improve its family choices, another key high-margin category for the company.
It will also be with celebrity chefs like Ann Kim to grow its own brand through the new Good & Chart Consops through part of its dedicated record label brand. The goal plan plans to launch 600 new food and beverages in Good & Chat and Hause Day, another dedicated brand, and revamp its pet supplies brand, Boots & Barkey.
The company aims to fix its clothing supply chain to reduce the time it takes to design, procure and acquire products on the shelves so it can respond faster to trends and better compete with Chinese e-retailers such as Shein and Temu.
It plans to invest $4 billion to $5 billion in stores, supply chains and technologies to reduce stocks outside and implement new delivery methods to increase delivery speeds. It will say in a press release that these investments will include modernization of old inventory management systems using “AI-driven technology solutions.”
“We know that if you can’t find the item you’re looking for because we don’t have stock, or we’re not happy with your store, there’s no Tarzhay Magic,” Fiddelke said.
It also plans to open 20 new stores, most of which will be in large formats, and invest in remodels throughout the fleet.
