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Target Says Online Sales Surge Tied to Store Inventories

With digital sales up 34% last quarter, the retailer says in-store pickups were central to both e-commerce and store sales growth

Target Corp. believes the key to success for online sales is managing inventory in its physical stores.

The retailer, which has struggled in recent years with empty shelves, said Wednesday its in-stock performance improved 20% in the fourth quarter over the same period the year before. With more inventory in stock, 30% of online orders were fulfilled from the stores, the company said, and a record number of online customers picked up their orders up in person over the holidays,

“While we’ve added capacity across our entire direct-to-guest network, our fourth-quarter experience demonstrated the power of relying on our stores to fill digital demand,” said John Mulligan, the company’s chief operating officer, on Target’s fourth-quarter earnings call.

Target’s online sales grew 34% in the fourth quarter, topping rival Wal-Mart Stores Inc.thanks in part to free-shipping offers during the holidays and sitewide discounts. Foot traffic in stores rose for the fifth straight quarter, but the company’s gross margin declined.

 

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February 24, 2016