Target’s bid to get shoppers back is showing results as it gears up for the holidays, recent data show.
The bullseye retailer has seen strong growth in customer visits this year, with some of the highest year-over-year increases in retail, according to multiple foot traffic data firms. Those signals have analysts optimistic about the company’s turnaround efforts as it heads into its busiest season.
Placer.ai found that Target stores saw a 7.2% increase in chain-wide visits for the third quarter, including a 5.9% increase in same-store visits. In addition, roughly half of shoppers visited Target twice a month or more, and nearly one in eleven shoppers visited five times or more.
Other data from Advan Research found a 4.7% year-over-year increase in foot traffic at Target in the third quarter, compared with 1.7% at Walmart. Target and Walmart report quarterly earnings next week.
Unlike most of its competitors, Target is nearly three fiscal quarters deep into a major turnaround effort under new CEO Michael Fiddelke, and several of his bets appear to be paying off.
“They picked off some of the easiest, low-hanging fruit to begin with,” Mizuho analyst David Bellinger told Business Insider.
Between a focus on tighter store operations and an initial refresh of categories like food and beauty, Target showed it was serious about winning shoppers back, Bellinger said. The company was also well dialed in to viral cultural moments, including the 30th anniversary of Pokemon, to get people lined up outside its stores.
“The real parts of the store that Target needs to fix, they haven’t touched yet, so that’s mainly home and apparel where you get better margins,” he added. “If those categories turn, then the Target turnaround is fully in force.”
Of course, Target’s past success in home and apparel may be challenging to replicate as Walmart has become a more formidable player in recent years, Bank of America analyst Chris Nardone said in a note earlier this week.
A recent bump in inflation, coupled with stalling wage growth, could point to a dicey road ahead for retailers of all stripes, but Jefferies analyst Corey Tarlowe told Business Insider that Target has been proactive about offering a strong value for shoppers’ dollars.
“If we are in an environment where, let’s say, the consumer needs to turn a little bit more toward a value focus, Target plays well into that,” he said, adding that the company has been regaining its trademark balance of affordability and style.
Some investors have also raised concerns about an apparent slowdown of traffic growth in October, but Bellinger said he attributes that to an exceptionally strong September. The company is also starting to encounter stronger year-ago comparisons.
That said, with this being Fiddelke’s first holiday quarter as CEO, it’s particularly important that Target sticks the landing this year.
“They definitely have a lot of momentum going into the holiday. The stores are a lot cleaner. They’re a lot sharper. Better staffed. So it seems like they’re on pace for a good holiday,” Bellinger said.
Target’s chief merchandising officer Cara Sylvester said at a media briefing last month that the company is taking a high-cadence approach to the holidays that she’s betting will keep shoppers coming in more often.
“It’s one thing to set product in November and then forget about it and have it sell down. We want to have that consistent newness,” she said. “Right up until the end.”
