As stay-at-home orders took hold around the country last month, Target’s in-store sales began to slide. But online sales — including curbside pickup — more than made up for it, skyrocketing to record levels.
The trend has continued into April with online sales soaring 275%.
Target’s overall comparable sales have risen 7% thus far in the February-to-April quarter, even with the frenzied buying of March slowing down, the Minneapolis-based retailer reported Thursday.
“Clearly, consumers continue to choose Target despite the shifts in their daily routines,” said Target CEO Brian Cornell, adding that the retailer has continued to gain market share during the coronavirus pandemic.
Many nonessential retailers such as department stores and mall-based apparel stores have been reeling from steep sales declines after they were forced to shutter stores last month. U.S. retail sales had the biggest drop ever recorded in March, with April expected to be even worse.
But Target is among the grocery and general-merchandise stores that have been able to stay open and have seen sales swell as consumers stock up on supplies as they work and school from home.
Target is well-positioned to benefit from the current environment because its broad assortment of products allow shoppers to pick up everything from groceries and medicine to toys in one basket. At the same time, its contactless fulfillment options such as Drive Up and same-day delivery through Shipt also are resonating with consumers, creating deeper bonds that Cornell expects to continue after the pandemic is over.
There have been some weeks this month when Target’s Drive Up volume has been seven times higher than normal, Cornell said. And on the Friday before Easter, Shipt handled a higher order volume than it does in a typical week.
Target, Cornell said, will “emerge from this crisis as a stronger company with additional opportunity to grow profitably for years and years to come.”
On Thursday, Target said it will extend a temporary $2-an-hour wage increase for its 350,000 store and distribution center workers through the end of May. It will also continue other pandemic-related benefits such as 30-day paid leave for employees who are 65 or older, pregnant or who have underlying medical conditions.
The retailer has been providing face masks and gloves and earlier this week started requiring workers to wear masks as Walmart has also done.
Target also is giving thermometers to workers who request them so they can check their temperatures before they come to work and stay home if they have a fever. Other retailers have made similar moves, with Amazon, for example, taking temperatures of all employees in warehouses as they start their shifts.
Other safety measures Target has put into place include more frequent cleanings, erecting plexiglass partitions at checkout lanes, and monitoring the number of people in stores.
Still, a group calling itself Target Workers Unite said the company should be doing more to enforce social distancing and protect workers with measures such as requiring customers to wear face masks, too.
The group is calling for employees to call in sick May 1.
Cornell said the employees raising such concerns are a “small percentage” of workers. He said he also has been talking to a number of state governors, looking to them to emphasize the importance of the public wearing face masks in stores.
He declined to say how many Target workers have contracted the virus nationwide.
But the company has had a number of cases. For example, earlier this week, Target confirmed that one of the workers at its distribution center in Woodbury has tested positive for COVID-19.
Sales of groceries and household essentials have seen the biggest jump at Target during the pandemic, up more than 20% this quarter. Sales of items such as games and printers have risen 15%.
Still, Target expects profits in the quarter to get squeezed because sales of higher-margin categories such as apparel are down as much as 20%. Target will have to write down some of that surplus inventory. It also is spending more than $300 million for the increased wages, bonuses and benefits.
Target’s shares slid 3% on Thursday. The company will report its full first-quarter results next month.
While there remains to be a lot of uncertainty about the length of the pandemic, Cornell said Target is talking to medical experts to plan for various potential scenarios.
“But unfortunately, I don’t have a crystal ball,” he said. “We’ve seen things change almost on a weekly basis.”