Why Target will win last minute shoppers this holiday season
Holiday retail sales for 2019 are forecasted to increase 4.5% to 5%, exceeding $1.1 trillion, according to an annual survey by Deloitte, and with Amazon breaking over 40% of online sales this year, there’s a race among all retailers to chip away at their share. There’s one thing that Target can do, however, that Amazon cannot do this holiday season and it’s win the last minute shopper.
According to Google last year, when the shipping cut-off date ends for online orders, last-minute shoppers get on their phones to find out where they can get their gifts. “During the 2017 holiday season, searches for ‘can I buy’ increased throughout the month of December, peaking on the 22nd, just three days before Christmas, and searches for ‘store hours’ peak on Christmas Eve, the biggest day of the year. Amazon won’t be able to deliver to these last minute shoppers, with the exception of the limited number of items on Prime Now. Even with the promise of 1 or 2 day shipping on Amazon items, many shoppers have been burned in the past with late deliveries of their gifts. No brand wants to “ruin Christmas”, but with Amazon’s supply chain relying nearly all on mail delivery systems, they are in a position to ruin a big day and some shoppers don’t want to risk that.
Target’s not-so-secret weapon is Drive Up
Target’s service that brings guests’ online orders to their cars for free is now available in all 50 states. As Americans are busier, Target Drive Up removes another friction point for the last minute holiday shopper. Gone are the times that last minute shoppers had to battle the pain of trying to find a parking space and wait in line to pay. Another advantage, from the promotional side of merchandising, is that Drive Up will be able to grab more shoppers who love (or wait for) the last minute deals.
Target using its 2,000 back rooms as distribution centers has become the smart way to transform their physical stores and inventory. Fulfilling online orders from a traditional distribution center is no longer the norm. Target CEO Brian Cornell said earlier this year that moving digital fulfillment from distribution centers to stores cut costs by 40%. Going forward, the retailer plans to fulfill more than two-thirds of its digital orders from stores. This achieves a few key objectives including leveling the playing field with Amazon.
There’s a level of confidence that ordering online and picking up in store won’t “ruin Christmas” like Amazon has the potential to do because guests have insight into items that are available in the store and they will have it in their possession that day.