Is Target losing its appeal?
That seems to be the question since Target has reportedly missed its forecasted earnings, leaving the company’s outlook in 2017, worse than what they predicted. It also appears that the stock shares are down 20% so far this year.
These low numbers bring to realization again, just how difficult it is for traditional retailers to compete against online retailers like Amazon.
The CEO of Target, Brian Cornell stated, “Our fourth quarter results reflect the impact of rapidly changing consumer behavior, which drove very strong digital growth but the unexpected softness in our stores.”
Now, not all Target sales are down, according to the retailer their digital sales were up 34% from the previous year.
That number is a great look for Target since that number is actually higher than online competitor Amazon’s total holiday sales as well as than Wal-Mart’s who reported a 29% increase in online revenue growth during the fourth quarter.
Now the online sales are great, however, the sales are still not big enough to offset the physical stores’ decline in sales. It has been reported by Target that the overall revenue for the company decreased by 4%.
That decrease could possibly be a result of Target making the decision to sell to CVS, their in-store pharmacies in late 2015. But then again, the fourth quarter result still proved that revenue was still down even after the company factored in the absence of pharmacy sales.
The reality is that consumers are no longer interested in the conventional way of shopping and that change in the shopper’s attitude has truly taken its effect.
And retailers like Target were not prepared for this change. The company had high hopes of strong holiday sales, however that hope was quickly dismissed in January when it was reported that the results would miss what they forecasted.
The Chief Financial Officer, Cathy Smith stated, “At a time when many others are shrinking, we are investing.” Smith also commented on the possibility of making Target’s prices lower.