Target Adjusts Marketing Around COVID-19
As millions of Americans were urged to stay home to slow down the spread of COVID-19, Target last week shined a spotlight on games, as well as home appliances, fitness equipment and office furniture online.
On target.com, an "entertainment for everyone" home page leaderboard ad spotlighted games, such as Pokonobe Associates' Jenga, Ubisoft's Uno, and Take-Two Interactive Software's NBA 2K20. The ad directed shoppers to an e-commerce page listing games and corralling them by:
- classic and strategy games,
- games for toddlers, kids, families, adults, parties and travel, and
- categories such as video games, games only at Target, puzzles, "arts & crafts," coloring activity books, and kids books.
The page also promised Target Circle loyalty members 25% off one SKU within the toy category. A feature within the retailer's March 22 circular also touted the deal, which was valid through March 28.
Elsewhere on target.com's home page, a trio of displays ads under a "home ideas & solutions" message directed shoppers to e-commerce pages for:
- "home fitness," spotlighting fitness equipment and an ad for private label activewear line All in Motion,
- "meal prep," listing SKUs such as tableware and cooking and baking essentials from brands including exclusive line Hearth & Hand with Magnolia,
- creating "your work from home space," elevating home office furniture.
COVID-19 Financial Impact
Target's comparable store sales increased 3.8% in February, which was in line with expectations, the retailer's chief executive officer Brian Cornell told CNBC. In March, however, Target's comp sales surged to more than 20% higher than last year. Moreover, comparable sales in home essentials and food and beverage were up more than 50%, while comparable sales in apparel and accessories were down more than 20%.
The mass merchant warned that continued sales declines in higher-margin discretionary categories, such as apparel and accessories, could result in lower-than-expected profits for the remainder of the quarter. In addition, certain first-quarter costs are anticipated to be higher than previously expected, driven by investments in additional employee pay and benefits, the spike in merchandise volume in stores and the supply chain, and the impact of additional hours dedicated to more rigorous cleaning routines in stores and distribution centers. Collectively, these changes are expected to add more than $300 million of incremental costs to the company's prior outlook for the first quarter, according to a March 25 media release from the retailer.
Target Delays Projects
As a result of COVID-19, the mass merchant has also adjusted the timing of some of its strategic initiatives to support its employees and minimize potential disruptions in their work. Target will reduce the number of new small format store openings and store remodel projects set for 2020, completing only the ones already in progress and rescheduling the rest for 2021. The retailer will now open 15-20 new small format stores in 2020, instead of 36, and remodel 130 stores in 2020 instead of some 300 locations. In addition, the effort to incorporate fresh grocery and adult beverages into the company's Drive Up curbside and Order Pickup services is temporarily on hold.
"We are prioritizing the work that's in front of us to support our [employees], store operations and supply chain as families across the country rely on Target for everything they need in this challenging environment," Cornell said in the release. "Over the past few weeks we've experienced an unprecedented surge in traffic and sales, as guests rely on our stores and same-day services. Ensuring we can take care of our [staff] and deliver for the millions of [shoppers] who are counting on us remains our top priority."