While Amazon is busy plowing money into making free Prime one-day shipping the new norm, results from its rivals Walmart and Target suggest their much-larger brick-and-mortar store fleets are proving to be key weapons against the online giant.
Target stock surged 20% on Wednesday to top $100 and close at $103, a record high, after the No. 2 U.S. discounter reported better-than-expected fiscal-second-quarter profit and raised its outlook. That followed a similar upside surprise from Walmart last week even as the industry faces an uncertain outlook over the U.S.-China tariffs war.
One common theme in the retailers’ results? Store-aided online demand.
Target said its comparable sales in the quarter that ended Aug. 3 rose 3.4%, contributing to that metric’s best two-year performance in more than a decade. A 34% surge in online sales accounted for almost half of the increase, thanks to customers picking up online orders in stores, driving up to Target parking lots to have their orders loaded in their cars, and using its Shipt same-day delivery service.
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Those three alternatives together have more than doubled their sales in the last year, to more than a third of Target’s online total, from 20% a year earlier, Target chief operating officer John Mulligan said on a conference call Wednesday.
“Our same-day options are growing much faster than our digital sales,” he said, adding that those three choices combined drove most of the quarter’s online growth. “They’re becoming the go-to-choice for (customers’) digital shopping. They are immediate. They allow guests to shop and receive their order on the same day.”
Date: August 22, 2019