What the Target layoffs will mean for consumers
Target announced Tuesday it will cut several thousand jobs, mostly from the company’s headquarters locations. The restructuring will no doubt have a massive impact on employees, but how will these changes affect consumers, specifically those who like to do most of their shopping online?
Target announced Tuesday it will cut several thousand jobs, mostly from the company's headquarters locations. This move is part of a restructuring plan that will cut $2 billion in costs and save money for the company over the next two years. Target CEO Brian Cornell revealed the details of the plan, which will narrow the company's focus to a few key product lines and improve the retailer's e-commerce business to revive lackluster sales.
The restructuring will no doubt have a massive impact on employees, but how will these changes affect consumers, specifically those who like to do most of their shopping online?
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Target Shifts Focus to e-Commerce
In 2010, Target spent about $2.1 billion on new stores and remodels. This fiscal year, the company is expected to spend nearly the same amount on capital projects, but half of the budget will go to improving its digital capabilities, particularly on consumers' smartphone shopping experiences. According to Fortune, Target CFO John Mulligan told Wall Street analysts he anticipates sales at brick and mortar stores to rise just 1 percent and digital sales to rise 40 percent this year.
This move might seem a bit overdue, as Target has been slow to adapt to the rise of online and mobile sales. Last year, the retailer improved its e-commerce experience and rewrote 75 percent of the code in its online shopping platform, so the site is now at least up to industry and consumer standards – especially for the mobile experience. According to A Bullseye View, Target's online magazine, Target.com saw record sales on both Thanksgiving and Cyber Monday in 2014, up 40 percent from 2013. Mobile traffic made up 60 percent of online visits during November and December.
As Target continues to invest in its e-commerce platform, consumers should expect a better online shopping experience with more features and online-only promotions.
Faster and Cheaper Online Shopping
Fortune recently ran a feature story on Target, saying company executives are striving to ditch the company's reputation as a "fast follower" in digital commerce. The retailer is known to follow its competitors' pricing rather than take the lead. This past holiday season, Target finally took the reigns and was the first company in its peer group to offer free shipping on all orders, no matter the size.
This year, Target is taking the bull by the horns and making a massive effort to catch up with and eventually stay ahead of its competitors. By October 2015, Target plans on equipping 350 of its stores to ship online orders, up from the 139 stores that currently have this capability. This will hopefully speed up delivery and allow the retailer to compete with industry giants, like Amazon and Walmart, who offer lightning-speed delivery and immediate in-store pickup.
Read: Target Price Matching vs. Walmart Price Match Guarantee
The company has also lowered the minimum online order needed to secure free shipping from $50 to $25. This new price is lower than many Target competitors such as Walmart and Best Buy.
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