Target keen on "discretionary" home in 2010
June 9, 2010,
Englewood, Colo. - While its home business continued to drop a second year as a percentage of total sales - down to 19% or about $12 billion from 21% in 2008 and 22% in 2007, Target Corp. is focused on home this new fiscal year with plans to enhance the business with "other merchandise innovations" as the retailer sees discretionary categories gain momentum in the improving economy.
"Target's discretionary assortments, particularly in home and apparel, provide the perfect opportunity for [shoppers] to indulge while feeling smart about their decisions," said Gregg Steinhafel, chairman, president and ceo, during the discount department store chain's 2009 annual shareholders' meeting held here this afternoon.
"Without a doubt, the economy and consumer sentiment have improved from their weakest point," he continued. "But there are many households that continue to feel the direct impact of job loss and other forms of financial stress resulting from the recession.
However, a much larger portion of our guests did not feel such a direct impact but instead became extremely cautious in their buying behavior. They paid off debts and carefully managed their budgets and now they are feeling optimistic enough to indulge in small ways."
Encouraged by these shifts, Target in 2010 will "remain diligently focused on applying a fresh approach to all aspects of our business," Steinhafel continued, with many "transformational changes " that are already beginning to drive traffic and sales. "In many cases the changes beyond food are so extensive that completed renovations resemble a brand-new Target store."
Food, a key sales driver over the past year, is being enhanced further this year. Another approximately 350 Target stores will include the "PFresh" program in 2010.
In home, Target recently revamped the department, where "we've clarified the assortment and aligned each style with best segments, all within a more open, visually compelling department that features...inspirational signage and more opportunities to touch and feel the products," Steinhafel explained.
Also, this year Target expects to open 13 new sites, which net of store closings and relocations will result in 10 new sites.
Among those is Target's "highest investment store" yet, which is slated to open in the coming six weeks in New York City's Spanish Harlem neighborhood.
"We're not bashful about building in high-density areas," Steinhafel explained to an investor during the question-and-answer segment. "We get the sales and profit associated with more guests coming to those stores."
Looking ahead to the next decade, Target has outlined several multi-dimensional strategies aimed at driving long-term growth. These include:
• Refreshing the existing store base;
• Continuing to expand current formats in suburban trade areas;
• Testing smaller store formats in dense, urban markets;
• Exploring future opportunities for international expansion.
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