At a meeting with investors, Target Chairman and CEO Brian Cornell and his leadership team revealed a new vision designed to transform business operations and consumers’ perception of the brand.
Over the next two years, Target plans to save $2 billion by improving technology and processes; streamlining supply chain and sourcing efficiencies; and restructuring the corporate workforce through significant job cuts.
During the restructuring process, thousands of employees within Target’s headquarters in Minneapolis, Mo., will be laid off. This move is expected to help the retailer operate with greater speed and agility, according to Target executives. New, centralized teams will be created based on employee expertise.
“While we’re in the early days and there’s no doubt that transformation can be challenging, we’re taking the steps necessary to unleash the potential of this incredible brand,” Cornell said. “I’m encouraged by our early momentum, and am confident that by implementing our strategy, simplifying how we work, and practicing financial discipline, we will ignite Target’s innovative spirit and deliver sustained growth.”
In 2015, Target plans to spend up to $2.2 billion on new initiatives, including $1 billion on technology and supply chain operations.
To inspire innovation and growth across the entire enterprise, Target also plans to focus on:
- Improving omnichannel capabilities: Target guests who shop both in-store and online generate three times the sales of those who only shop in stores, according to a company press release. The retailer also expects to see digital channel sales grow by 40% and boost total sales between 1.5% and 2.5% in 2015. As a result, the retailer plans to focus on creating a complete brand experience across stores, e-Commerce and mobile.
- Style, Baby, Kids and Wellness categories: These merchandise categories are being prioritized in 2015, with Target focusing on providing differentiated brands and products. In 2014, these four categories accounted for 25% of Target’s total sales.
- Repositioning grocery: In order to compete more effectively with Walmart and other retailers that are expanding into grocery, Target is repositioning its grocery offerings to be more appealing to shoppers.
- Tailoring assortments: Target is striving to create a more “guest-centric” experience by offering locally relevant products based on demographics, climate, location and other factors. By strengthening its data and analytics capabilities, the retailer also plans to further personalize digital experiences, loyalty programs and promotions.
- New store formats: Over the next year, Target plans to open new stores using the TargetExpress and CityTarget formats, which are smaller formats designed to cater to more dense urban areas.