Just like Santa, Target needs a lot of helpers during the holiday season. This year the discount retailer is giving employees at stores and distribution centers a serious bump up in hours to win retail’s annual shopping bacchanal.
The company, looking to continue a winning streak that included a 5.7% jump in comparable sales last holiday season, said on Wednesday that they are putting an extra $50 million into the effort. Target called it the biggest payroll expenditure ever during a holiday quarter but would not say how big a percentage of its payroll that represents.
Target, which spent $10 billion in the last three years on store remodels and e-commerce enhancements, has turned its business around spectacularly, as detailed in a recent Fortune feature. The investment included upgrading stores, raising workers’ wages to improve customer service, and overhauling store brands including 40 new labels. Comparable sales have now risen for eight straight quarters.
And the holiday season will be a big test of how well the company can protect that momentum. That’s all the more critical given that Thanksgiving falls on November 28th, making this year’s peak shopping period the shortest it can be.
“Every single day if you’re in retail, if you’re at Target, counts from Black Friday to Christmas Eve,” Target Chief Executive Officer Brian Cornell told reporters at a media briefing in New York.
One of the key components in Target’s success has been a push for faster delivery. The payroll investment on that front includes two times as many people working in stores and distribution centers on filling orders as they had during the 2018 holiday season. In-store pickup and faster delivery contributed 75% of Target’s digital revenue growth, according to the company.
Last year, Target benefited from the bankruptcy of some rivals, notably Toys ‘R’ Us. This year, with less such market share up for grabs, the company is betting that its new loyalty program, Target Circle, will give it an edge over competitors, including Walmart, Best Buy, and Amazon.
Launched earlier this month, the program will offer members early access to some Black Friday deals, as well as daily deals on products for kids for most of November, a benefit similar to that of loyalty programs at higher-end chains Macy’s and Nordstrom. The company says Target Circle members spend up to 5% more. The program is free to join and, unlike similar initiatives at other stores, benefits are not dependent on spending levels.
Target has made big strides in its logistics and e-commerce infrastructure. But given the importance of getting shoppers into stores, much of its efforts also deal with improving customer experience in Target’s physical locations. For years, Cornell’s mantra has been to make Target “America’s most convenient place to shop.” Ahead of the holiday season, he wants to update that.
“We want to go into this holiday season making Target America’s favorite place to shop,” he said, adding “the human touch really matters.”
Another big test for the company will be the 25 Disney stores recently opened within Target locations. That program will expand to at least 40 stores-within-stores next year. So far, Cornell said, the shopper reception has been “sensational.” As with every holiday season, Target will sell exclusive toys and other products as it tries to outmaneuver rivals like Amazon. And last year’s program of free shipping for online orders—no minimum purchase necessary—kicks back in on Nov. 1.
Like Target, Walmart announced its holiday strategy on Wednesday and it is also heavy on customer service improvements. For instance, its Check Out With Me is now available at all big stores; shoppers paying by credit card can skip out on long lines by having employees equipped with cellular devices and bluetooth printers check them out anywhere in the store.
Walmart is also offering free next-day delivery on many items for the first time, and will, as usual, dole out a steady stream of holiday season deals. Some of those will launch online this Friday, the earliest Walmart has offered such deals.
“Saving our customers time is also paramount at this time of year, especially with fewer days to get ready,” Walmart U.S.’ Chief Merchandising Officer Steve Bratspies said in a statement.
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