New York – Target remains confident in its ability to build its share in home. But in the near term, it is being very careful not to jump ahead of demand.
Sales in home and other discretionary businesses are still running soft, although growing incrementally. “For this reason, we’re taking a cautious approach to our inventory commitments in these areas,” said Christina Hennington, chief growth officer.
The company will focus on “the magic of Tary-jay and affordable joy,” said chairman and CEO Brian Cornell. If consumers begin spending more on discretionary goods, Target will be positioned to flex up to meet demand.
Here’s more on what senior executives shared about their plans during Target’s annual Financial Community Meeting this morning.
- There was a sharp pullback in sending in the home, apparel and hardlines categories last year. However, they collectively contributed around $55 billion, or 51% of Target’s $107.6 billion in 2022 sales.
- Target will be placing “select bets” on discretionary goods with a focus on newness and innovation. “In an environment where consumers are making trade-offs, more of the same isn’t going to get it done,” said Hennington.
- The retailer is also putting a priority on seasonal businesses, which it expects to remain relevant in that space.
- Later this year, Target will launch both national and private label brands in home. The company provided no additional information about categories or timing.
- On the digital side, Target is looking to draw more suppliers into its Roundel retail media network. “It gives our vendors an opportunity to target the guests who are most interested in their products and it gives them real-time information about how they’re selling,” said Hennington.
The company is planning for faster inventory turns overall in 2023 but will continue to plan inventory positions on discretionary goods carefully, according to Michael Fiddelke, CFO.
“Apparel and home will have their time in the sun again, and we’ll be well-positioned when they do,” he added. “We’re taking an appropriately cautious approach and will adjust as the year goes on.”
