Daily Management Review

Lockdown Orders Propels Target's Online By 275% In April


Lockdown Orders Propels Target's Online By 275% In April
The coronavirus related lock down and stay at home orders have propelled the demand for products online which was cited by Target Corp to be the reason for the company being able to cushion some of the hit that it has taken because of coronavirus lockdowns to in-store sales during the quarter ended March 31. However the retailer said that it was till unable to address its dropping margins as well as its profit from higher costs.
Target said that there was 275 per cent spike in digital comparable sales so far in April. The company also said that there were several days in the month of April when its online sales surpassed the sale for kits Cyber Monday, which is traditionally the busiest day for e-commerce companies.
However, the temporary wage increases of $2 an hour for store and distribution center workers will result in a drop in its margins by 5-percentage points in the first quarter, the company said. This will also be compounded by a relatively higher sales of low-margin products such as groceries. The company now plans to pay higher wages until May 30.
Retailing companies such as Target, along with Kroger and Costco, are among the very few businesses that have apparently benefited from the spread of the coronavirus pandemic.
Other segments of the retail industry, particularly those in the apparel chains and department stores, have been hit very hard by the pandemic and the lockdown and stay at home orders. There have been reports that some of such companies are even on the verge of filing for bankruptcy.
"Watching the retail industry decline is not something I enjoy, but I think going forward we're going to see significant market share opportunities, across our apparel business," Target Chief Executive Officer Brian Cornell said on a media call.
"That'll be a benefit to us. But unfortunately, it will come at the expense of others who are losing their doors and potentially no longer operating in this future environment."
The company said that it has been able to make up more than the losses it had incurred in April in comparable store sales because of the surge in demand for online products in the same month.
There has been a 5 per cent growth in comparable sale on the overall.
There was a 12 per cent growth in the sales of food and beverage items in April, while a 30 per cent growth in the sale of toys and electronics was also recorded by the company. In comparison, there was a drop of more than 40 per cent in the sales of apparel and accessories, the company said.
Target said quarter-to-date comparable sales have risen over 7%, with digital sales more than doubling.