Target’s digital sales fueled first-quarter sales gain, but it paid hefty price for growth
's digital sales fueled first-quarter gains, but the big-box retailer's earnings results Wednesday showed it paid a hefty price for that growth as labor costs rose and sales of higher-margin items like apparel dropped.Target stores have remained open across the country during, but the crisis has underscored the challenge of making money from e-commerce. As retailers sell more online, they're also taking on more work, such as picking items, packing them and shipping them.
Target's same-store sales grew by 10.8% in the first quarter from a year earlier. The vast majority of that growth came from e-commerce. Sales at stores open at least 12 months rose 0.9%, while digital sales surged by 141%. The retailer's strongest merchandise category was what it calls hardlines, which includes durables like appliances. The category grew by more than 20% from the previous year, fueled by electronics sales, Cornell said. Food and beverage grew by more than 20%. Essentials and beauty were up by the high-teens.Customers' shift online has increased costs, but the retailer has tried to manage them by using its many stores as a fulfillment centers.
He said 5 million new customers shopped at Target.com and over 2 million tried its drive-up service for the first time in the quarter. He added that over 70 million people have now signed up for Target Circle, its smartphone app, as the company tries to position itself as a safer place to shop.
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