Target is set to open a store next year in Philadelphia’s art museum district

NEW YORK — Target Corp. is making major investments in its supply chain infrastructure as it seeks to facilitate increased online sales and support better in-stock conditions in its stores.

“Our future depends on getting the fundamentals right,” Target chairman and chief executive officer Brian Cornell said during his company’s recent meeting with the investment community. “And that means modernizing the supply chain. It means enhancing our technology, taking complexity out of our systems, elevating the use of data and driving productivity savings across the entire business.”

With that in mind, Target is increasing its capital spending from $1.4 billion in the fiscal year that ended in January to $1.8 billion in the current fiscal year, and up to $2.5 billion next year. Much of that spending will be devoted to behind-the-scenes improvements to the company’s systems. But the retailer is also testing improvements to the store environment aimed at improving the experience of its shoppers, known within the company as guests. Many such enhancements are being tested in a pilot program called LA25.

“This spring, we are taking 50 of our top enhancements that we’ve been testing across the country and putting them together in 25 stores in Los Angeles,” Cornell said. “The goal is to see how we can improve the guest experience and grow sales when all of these elements are working together. We are making product improvements the hero with more impactful presentations, fixtures and signage. We will make it easy for the guest to pick up online orders with dedicated service stations. Guests will see a floor pad filled with reinventions across the store.”

Target is also adding new stores, with 12 outlets scheduled to open this year. Most are smaller outlets located in urban neighborhoods or college communities. But new stores are not at the center of the retailers growth strategy.

“Not that long ago, growth in retail meant adding a lot of stores,” said Target executive vice president and chief financial officer Cathy Smith. “Today, our growth plans are focused on using the assets we have differently. And at Target, we are fortunate to have many great assets to build upon. We have one of the strongest brands in the world and a unique relationship

with our guests. We have 1,800 well-located, well-maintained stores that are fun to shop. We have a guest-focused team both at headquarters and in our stores that differentiates us from all other companies, not just retailers. Our product design, development, sourcing organization keeps us ahead of the trends and allows us to offer beautifully designed, innovative and
fashionable merchandise at an amazing value. And we have built an impressive array of owned and exclusive brands, many of them $1 billion brands that are guests love and trust. Target has an enviable set of assets and our growth plans today are focused on using all that is Target to serve our guests in new ways and more reliably.”

Smith said she was confident that Target’s initiates will support the company’s consistent growth, and allow it to deliver comp store sales growth of at least 3% in the current fiscal year.