It plans on deploying free shipping as a tool to fight off rivals which includes Amazon.com. It expects strong growth in the apparels, toys and home décor categories.
With retailers facing a lackluster year so far, Target Corp is likely to go for more aggressive deal-driven promotions and extend its free shipping to rake in its profits.
Despite the uncertainty surrounding the U.S. presidential elections, the company expects consumer spending to be fairly robust during the holiday shopping months of November and December.
The holiday shopping season is critical for retailers since their annual revenue sales chart peaks during this season.
“We are looking at very low unemployment, fuel prices remain low, the commodity pressure on food is down,” said Brian Cornellm Target’s Chief Executive Officer. “The overall approach for the consumer is going to be positive this season.”
After a slow performance in the first half of the year, in which it warned investors of a flat, if not lower, same-store sales, improving its performance in the holiday months is crucial for Target.
However, if shoppers turn to the internet for their purchase and spend on big-ticket items such as homes and cars, instead of smaller, more discretionary purchases, which make the bulk of Target’s offerings, it could spell trouble for the retailer.
In order to avoid such a scenario, Target has come out with a strategy to entire shoppers with its “Ten Days of Deals.”
Furthermore, Target will also extend its free shipping offer till January 1 and drop shipping fees for all online orders for a third year in a row. Currently, in order to snag a free shipping, shoppers have to spend a minimum of $25.
Incidentally, free shipping is a key component in enticing shoppers to shop more: last year, Target’s online sales grew by over 30% during the fourth quarter. It is also a tool which it can use to fight off rivals, including Amazon.com Inc.
In order to speed up deliveries, Target has expanded its ship-from-store program to cover as many as 1,000 stores, up from 400 last year.
With Hispanics being traditionally a strong demographic for its sales, Target said it would increase it advertising budget for television with a special focus on Spanish-language programs.
Strong growth is expected in its apparel, home décor and toys categories. However, the retailer will also focus on such fashion accessories such as the Apple Watch.
In August, Target had said, low demand for Apple products had hurt its electronic sales during the second quarter. It has now said it will be working more closely with Apple to capitalize on its new product offerings.