Target announced Tuesday, March 3, it would cut several thousand jobs throughout a two-year period as part of a cost-savings plan.
The retailer is also working to restructure the business by streamlining operations, opening new stores and revamping its food offerings, among other measures.
“We’ll be much more nimble, much more agile,” Brian Cornell, the chief executive, told a meeting of analysts in New York, according to The New York Times. “We’re in the very early stages of a shift in our business.”
The announcement comes during a time that Target is overcoming a string of tough years involving slow customer traffic, a 2013 customer data breach and competition from online retailers.
A failed expansion into Canada also hit the retailer, costing it more than $2 billion in net losses since 2011. In January, Cornell announced the company would pull out of Canada, closing all 133 stores in the country. The move caused 17,600 individuals to lose their jobs.
“We’re putting all of our energy around building our business in the US,” Cornell said.
Target has not specified the number of employees it would cut, but most are expected to be made at its headquarters in Minneapolis, Minn., where it employs 13,000 people. The cuts, meant to reorganize employees and make business operations more efficient, are expected to save Target about $2 billion.
“We’ve got to make sure we’re a simpler organization,” Cornell said.
Among strategies that have proven effective for the retail business include focusing on City Target and Target Express stores, smaller formats that allow the company to provide more personalized merchandise for specific markets. This year, the company is opening eight Express stores.
Despite being smaller, the City Target format sells about twice as much per square foot compared to the average Target store, which ranges between 90,000 to 125,000 square feet.
“The performance of City Targets has been nothing short of phenomenal,” Cornell said.
More focus will also be placed on the company’s fashion, health, infants’ and children’s departments to drive customer traffic and boost sales. The food department will also include more natural products, such as gluten-free and organic options.
“Overall, we lack a clear positioning (on food),” said Kathee Tesija, Target’s merchandising chief. Shoppers don’t come to Target for food, and “that has to change.”
Target will also invest in its online business. Tesija said 75 percent of the retailer’s customers begin shopping on mobile devices, and last year mobile traffic grew 44 percent. Furthermore, customers who shop Target both in-store and online generate three times the sales that guests who shop in stores only do, according to a news release by the company.
Craig Johnson, president of Customer Growth Partners, a retail consulting firm based in New Canaan, Conn., told the Times that it would be challenging for Target to succeed, but that its plans could draw many customers. He added that while cutting workers and costs was not an easy step, it is one that is necessary.
“The trick is, you cant cut your way to growth. You have to build traffic. You have to get your customers back,” he told the Times.
(With reports from The New York Times and USA Today)
(www.asianjournal.com)
(LA Weekend March 7-10, 2015 Sec. D pg.1)
