December 2nd, 2016

Target’s RFID and Fulfillment Investments Lead to Massive Increase in Digital Sales

Originally posted on Retail Info Systems News:

RFID at TargetYear over year, Target continues to surpass expectations and deliver quality experiences to its customers — 2016 has been no different. Although the third quarter saw a .2% decline in sales from last year, its comparable digital channel sales grew a whopping 26% over last year, proving its continued investment is paying off.

“We’ve been very committed to improving our digital engagement, and year-to-date we’re up over 20%,” said Brian Cornell, chairman and CEO, Target on a recent earnings call with analysts. “We saw a 26% growth in the third quarter, and the investments we’ve been making to improve functionality and ease online is certainly connecting with our guests.”

Over the past couple years Target has been on a journey to drive greater efficiency throughout its organization. These investments have been showing strong improvement, as well as operational efficiencies and costs that the retailer is able to return to the bottom line. At the core of these investments is inventory data, which is key to the retailer’s speed and reliability. The retailer has implemented RFID across a portion of its apparel assortment in more than 1,600 stores.

“In affected categories, overall inventory accuracy has increased dramatically, meaningfully reducing the number of occasions in which we can’t physically locate an item,” said John Mulligan, COO, Target. “In addition, we’ve made system changes to optimize replenishment of products that our guests purchase in multiples and made changes to minimum on-hand standards and higher volume locations, both of which have dramatically reduced our stocks on effective items. We will continue to test and rollout these enhancements throughout next year.”

Through the redesign of its in-store replenishment processes and algorithms the retailer has delivered significant payroll savings that it can reinvest in service. Two areas that will reap the benefits of this savings are the store pickup process and ship-from-storage capability. By investing in service, Target is enabling customers with the flexibility of pickup that they enjoy all year, but especially during the holiday season. During the peak period between Thanksgiving and Cyber Monday, Target expected its stores to fulfil more than half of its digital demand.

While this is the third holiday season the retailer has offered order pickup in all of its stores, it has targeted for volume to grow another 50% over last year. To accommodate the holiday demand, it has added additional holding capacity to more than 80 of its highest volume pickup locations, and invested in scheduling tools and additional digital devices to enable high volume locations to deliver fast service. To underscore the retailers’ commitment to the pickup experience, this year the store team in some 300 high volume locations will wear unique shirts and deliver separately branded reusable bags.

“While we’re just getting started, our team is really excited about our progress in modernizing Target’s operations, and we’re pleased to hear from many of you that you’re beginning to notice the difference when you shop with us, while that’s great to hear, I want to emphasize that we are not slowing down,” said Mulligan. “Our team is energized and focused on our plans for the next year and beyond.”

For more on Target’s success, and to discover insightful ways that technology has driven transformation join Mike McNamara, EVP and chief information and digital officer, Target Corp. at the NRF Big Show 2017. On Monday, January 16 at 2:30 he will take the stage and present “How Target’s Technology Team is Leading the Way on Transformation” and share how he’s been able to drive transformative change since joining the retailer in 2015.

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