Target Aims for $15 Billion Revenue Boost, Focuses on Digital and In-Store Experience

With cautious consumers making forecasting more difficult, Target on Tuesday (March 4) announced a plan to increase revenue by $15 billion over the next five years, a goal that underscores the company’s strategic push to deepen customer engagement through its physical stores and digital platforms.

Referencing a “soft topline performance” in February, Chief Financial Officer Jim Lee pointed to a “declining consumer confidence impacted our discretionary assortment overall” during the company’s Q4 and full year earnings call.

As retailers face heightened competition and shifting consumer preferences, Target’s overarching strategy is rooted in elevating its digital offerings and optimizing its store experiences, according to CEO Brian Cornell.

“Our team grew traffic and delivered better-than-expected sales and profitability in our biggest quarter of the year,” Cornell told analysts. “Results were led by strong performance in Beauty, Apparel, Entertainment, Sporting Goods, and Toys. As we look ahead, our continued investments in digital capabilities, stores and supply chain — combined with a focus on newness, value, speed and reliability — will further differentiate our one-of-a-kind physical and digital shopping experience.”

Fourth-quarter comparable sales grew 1.5% while net sales fell 3.1%, to $30.9 billion. Digital comparable sales grew 8.7% in the fourth quarter, while same-day delivery via Target Circle 360 rose more than 25% compared to last year.

Full-year 2024 comparable sales increased 0.1% while full-year net sales decreased 0.8%, to $106.6 billion. Traffic grew 1.4%, reflecting increases in both stores and digital channels.

Read more: Target to Include Shopify Merchants in Digital Marketplace, Physical Stores

At the core of Target’s growth strategy is its investment in digital capabilities, Cornell noted. Over the past few years, Target has focused on integrating technology with its in-store experience to create a more cohesive and personalized shopping experience. This push includes leveraging artificial intelligence, data analytics and social media for tailored interactions with customers.

Target officials believe their emphasis on digital engagement is crucial to the long-term goal of a $15 billion revenue increase in the next five years, with investments aimed at creating an immersive experience combining search, social and data-driven personalization.

“Digital is the new front door to our experience,” Cara Sylvester, executive vice president and chief guest experience officer, told analysts. “We view digital as another opportunity to do what we do best: bring that Target magic to consumers. It starts from their couches as they enjoy our ads and these campaigns are more than entertaining. They reinforce the love our customers feel for Target.”

These efforts go beyond simple engagement, Sylvester added. Digital sales now account for about 20% of Target’s total volume. Social platforms also drive traffic to Target’s digital channels, presenting significant growth opportunities.

“We plan to leverage AI to identify emerging trends and highlight relevant products,” she said. “By connecting our digital experience with the in-store shopping experience, we’re creating a seamless customer journey.”

More than one third of Target app users engage with it while shopping in stores, spending 50% more per transaction, Sylvester noted, while the relaunch of Target Circle has been a success, with members spending three times more on average than non-members. Membership has quadrupled over the past year, and the goal is to triple that figure in the next three years.

“At Target, they’re part of our holistic ecosystem,” she said. “Target Circle is a critical lever for delivering a more personalized experience for our guests. It’s how we’ll drive deeper relevance and loyalty.”

See also: Target Bolsters in-Store Experiences Through Strategic Collaborations

For Target, translating increased engagement into tangible revenue growth is a matter of leveraging both digital and physical channels to create deeper customer loyalty and drive repeat purchases, Cornell said. While consumer spending has slowed in some categories due to ongoing economic pressures, the company has seen consistent growth in its digital channels. In 2024, digital sales grew by 8.7%, with same-day delivery services seeing a particularly strong 25% increase.

Target’s strategy of blending digital and in-store engagement reflects current consumer behavior. According to the PYMNTS Intelligence report, “2024 Global Digital Shopping Index: The Rise of the Click-and-Mortar Shopper and What It Means for Merchants,” commissioned by Visa Acceptance Solutions and drawing from a survey of nearly 14,000 consumers across seven countries, shows nearly 40% of consumers are now Click-and-Mortar shoppers, who use both digital and physical channels. The report says 25% of shoppers use digital assistance while in-store, and 14% make online purchases for in-store pickup.

The goal, Cornell said, is to ensure that Target’s products are discoverable and seen as essential to consumers’ everyday lives. As the company moves forward with its $15 billion revenue target in mind, it will continue to refine its approach to both physical and digital retail, focusing on customer-centric solutions that drive engagement, loyalty, and long-term sales growth.

“We’re not like other retailers, which is precisely what consumers have told us they value about Target,” he added. “In 2024, we had 350 million more guest trips compared to 2019. We’re blazing a trail for long-term growth. We expect to invest $4 billion or $5 billion in stores, supply chain and technology this year. We want to elevate the everyday to something special.”

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