Is There A “Retail Renaissance” Under Way?
On Monday I dissected the underlying causes of Walmart’s best quarterly growth in over a decade. Now let’s look at Target, who reported their Q2 Earnings yesterday. Just like Walmart, Target had a boomer quarter with revenue jumping 7% over Q2’17. But what’s fascinating is that Target’s growth was primarily driven by same-store sales at physical locations, which increased 6.5% YoY. As you can see in the graphic below foot traffic is up in the B&Ms, and especially at Target.
Target also did well on the eComm side with digital sales increasing 40% over the previous year. However in-store sales clearly carried the day. This is the opposite of Walmart who used an advanced omnichannel blend of in-store and eComm to propel their growth. I’m not sure if either approach is better than the other, but the differing routes to the same success is sort of unusual to see.
Will Target be able to maintain its growth trajectory through in-store traffic? Right now they could be getting the benefit of a sizzling economy, which can’t go on forever. On the other hand, their QoQ revenue has risen for five consecutive quarters, which means they’ve fundamentally improved their core offering (better product mix, lower prices, etc.), and customers are responding. It’ll be interesting to see if they can keep this pace up.