Retailer’s lean inventory style leaves some shoppers frustrated.
Jennifer Healy is one of Target’s most loyal customers. She frequently shops at the retailer, owns a Redcard and often looks for deals through the company’s new digital tool called Cartwheel.
But loyal doesn’t always mean happy. Each time Healy shops at the SuperTarget in Edina, she says the store seems to be out of basic goods like flour and corn syrup.
“I don’t understand it,” said Healy, a resident of southwest Minneapolis. “They are able to know so much about shoppers with all of their technology. But they always run out of things they know people will want. It makes me very frustrated.”
Large big-box chains like Target and Wal-Mart operate thousands of stores with complicated inventory systems, so the occasional out-of-stock is not unusual. But some consumers and analysts say Target’s ambition has at times outpaced its supply chain, especially as the retailer expands into food and groceries, opens new international stores and faces brutal price wars during the holiday shopping season.
Target officials strongly deny that stores frequently run out of goods. Of the 2 million customers who took weekly online surveys this year, “overwhelmingly the guests are highly satisfied not just for the overall shopping experience but for being able to buy what they came to purchase,” said Keri Jones, senior vice president of merchandise planning.
But Target’s debut in Canada earlier this year, the company’s first international expansion, was marred by reports of empty shelves and shortages of grocery products.
And after Black Friday weekend, Target.com was already out of stock on nearly 60 percent of the top holiday toys, according to a Bloomberg Industries analysis. That percentage is much higher than rivals Wal-Mart, Kmart and Amazon.com.
Out-of-stocks seem to be more frequent in groceries, with customers complaining that even SuperTargets frequently run out of basic items.
“I went to Target two days before Thanksgiving and they were completely out of fried green beans — something I consider to be a Thanksgiving staple,” Twin Cities resident Alyssa Beck wrote in an e-mail. “I went to Cub [Foods] and found displays of fried green beans in two different parts of the store.”
Historically, Target tends to keep its inventory lean. The number of times Target resupplies its stockrooms each year is noticeably fewer than its peers. In 2012, Target on average replaced its entire inventory just 6.4 times, according to the Kantar Retail consulting firm, based in Boston.
By comparison, Amazon and Wal-Mart turned their inventory 8.3 times. In fact, Target’s inventory is much closer to that of Walgreens, a pharmacy chain.
Target has worked hard to avoid ordering too much inventory because profits would suffer if it needed to cut prices to clear unsold goods. But experts say Target’s perceived shortages in food and household items are problematic because they are staples.
“It’s absolutely true that Target has focused on maintaining a lean inventory and, generally speaking, that’s a good thing,” said Gerald Storch, a former CEO of Toys R Us and former vice chairman at Target who oversaw the company’s supply chain. “Out-of-stocks, however, are not a good thing.”
Target spokeswoman Katie Boylan acknowledged that shortages sometimes happen but said the company is committed to the needs of both its customers and investors.
“Managing inventory effectively is one of Target’s strengths, and has always been a strategic tool for us as we aim to provide a great experience for our guests and manage the business responsibly,” Boylan said. “We think first about our guests, and what they will be looking for when they are shopping at Target. At the same time, we have a responsibility to our shareholders.”
Added Boylan: “Of course, from time to time, we will not be able to meet the expectations of every guest.” ”
Some analysts wonder if Target’s inventory strategy is costing the company much-needed sales.
“You have to win on the top line,” said Storch, who now runs Storch Advisors consulting firm in New York. “If you don’t win on the top line, you can’t win on the bottom line.”