Walmart and Target among retailers spending billions to nab Amazon

As Amazon continues to dominate e-commerce, major retailers are stepping up investment in hopes of benefiting from shifting consumer demands. E-commerce sales topped $790 billion in 2020, according to IBM’s U.S. Retail Index, and with them expected to continue growing, more retailers are shifting more of their resources to retain customers they’ve won in 2020 and hopefully attract a few more.

Walmart (NYSE:WMT), Target (NYSE:TGT), Best Buy (NYSE:BBY) and Disney (NYSE:DIS) – already among the biggest e-commerce players in the country – are among the retailers investing heavily in these areas. And that’s not even including investments from Amazon (NASDAQ:AMZN), which remains the biggest e-commerce player with nearly 40% market share.

Minneapolis-based Target’s comparable digital sales were up 118% year over year, the company said Tuesday in its fourth quarter earnings call. Digital accounted for two-thirds of the company’s overall composition growth in the quarter, Target said. Same-store sales rose 6.9%, the company said. Target’s same-day services, which include online order pickups from stores, drive-through pickups and its Shipt delivery services, were up 212% year-over-year. More than 95% of Target’s fourth-quarter sales were made by its stores, according to the company.

To continue accelerating this digital growth, Target will invest $4 billion each year for several years in the company. This investment will include technology to accelerate store replenishment, new distribution centers and 30-40 new stores each year, many of which are “small format” locations.

CEO Brian Cornell said Target will continue to expand its partnerships with brands such as Levi’s, and will add Ulta Beauty locations in approximately 100 stores this year and sell the brand’s products on The investments are part of a differentiated services approach that the company chose in 2016.

“We could just as well have built additional fulfillment centers and driven the shift to digital sales with greater home delivery capability, but as you know the economy was terrible and we wouldn’t have been differentiated” , Cornell said on the earnings call. “In short, we didn’t see the textbook solution as scalable or as likely to do what we did, which was to lay the foundation for years of customer satisfaction and brand loyalty.”

Taking a long-term view created difficulties for the retailer at first, but Cornell believes that with the billions in investment, it will be well positioned to maintain and even grow its digital business.

“As we designed our strategy and invested accordingly, we relentlessly asked ourselves what products and services these stores should offer, where they should be located, how their operations should be adapted to meet the needs of the neighborhood and, ultimately, how ensure that our stores work with all of our other assets as a single shopping platform that would drive customers to Target however they want to shop,” said Cornell.

Read: Target posts outstanding fourth quarter results

“In answering these questions, we did two things at once. We’ve put the brick-and-mortar store more firmly at the center of our omnichannel platform, and we’ve created a sustainable, sustainable, and scalable business model that sets Target on its own path. Our goal was to use our proximity – [with] nearly 1,900 stores within 10 miles of the vast majority of U.S. consumers – to deliver the fastest, easiest digital processing in retail, and the capabilities we’ve built to become the place Easier to Buy in America also solved the critical question of how to grow our digital sales exponentially while maintaining our overall business profitability.

Cornell said same-day services saw drive-through pickup growth of 600% in 2020, and Shipt, Target’s same-day delivery business, grew more than 300%.

Like Target, Walmart is investing heavily in its ability to deliver on e-commerce. The Bentonville, Arkansas retailer said it would invest $14 billion in capital expenditures, much of it on the supply chain side. Walmart officials expect e-commerce revenue to top $100 billion in the next few years.

The investments are designed to pay off over the next few years, “not the next 12 months,” Doug McMillon, Walmart president and chief executive, said on the Feb. 18 investor call.

“Walmart’s investments over the past decade to boost its online business, such as curbside pickup and fast delivery, meant customers could buy just about anything contactless, if they wanted to,” FreightWaves principal analyst Andrew Cox wrote in his Feb. 1 Point of Sale newsletter. 23. “In 2020, online sales shared continued momentum in general merchandise, while grocery pickup and delivery benefited from Walmart’s scale and continued strong execution in options contactless execution.”

Read: Can $14 billion bring Walmart to e-commerce profitability?

Brett Biggs, executive vice president and chief financial officer of Walmart, said on the earnings call: “From a position of great strength, we will now accelerate investments in supply chain, technology, automation and our associates, allowing us to stay ahead of changes in customer behavior.

Biggs added that Walmart Fulfillment Services is expected to grow and become a “larger portion of earnings growth going forward, including [fiscal year] ’22.

Walmart, however, has faced challenges due to digital growth, and a portion of the $14 billion will go towards mitigating them.

“As we’ve added pickup and delivery capabilities, we’ve seen strong growth, but too often we’re not able to keep up with demand. It’s a good problem to have, but we need to address it quickly, given the accelerating trends in the wake of the pandemic,” McMillon said. “So we will be investing more aggressively in capacity and automation to position ourselves to win the primary destination position with customers. We play absolutely attacking here.

This breach means gaining speed and efficiency behind the scenes, which McMillon says will result in a better customer experience.

Best Buy is another retailer that is working to improve its e-commerce experience. The electronics retailer reported a 90% growth in online sales in the fourth quarter to $6.7 billion, which accounted for 43% of its domestic sales.

“Our stores played a pivotal role in driving these sales, as nearly two-thirds of our online revenue was picked up in-store or curbside, shipped from a store, or delivered by a store employee,” said said CEO Corie Barry, noting that home shipping volume increased 38% and same-day shipping volume increased 376% as Best Buy employees delivered more than one million items units.

Barry pointed out that Best Buy stores saw a 15% reduction in foot traffic in the fourth quarter, but about 35% of stores fulfilled 70% of orders shipped from the store.

“We believe we can achieve similar results by consolidating volume, using a smaller group of stores as hubs over time. Additionally, in a subset of these stores, we plan to reduce square footage. sales floor and install warehouse-grade packing station equipment and supplies,” Barry said.

Best Buy plans to reduce retail space from 27,000 square feet to around 15,000 square feet in some locations, instead using the space to fulfill or package online orders.

Even Disney announced on Wednesday that it would close about 20% of its outlets in 2021 and put more emphasis on its e-commerce business.

“As consumer behavior has shifted towards online shopping, the global pandemic has changed what consumers expect from a retailer,” said Stephanie Young, president of Consumer Products Games and Publishing for Disney, in a statement. communicated.

Click for more articles on Modern Shipper by Brian Straight.

You might also like:

Social Auto Transport Raises $1.5M in Seed Funding to Expand Gig Economy Auto Moving Business

Bringg’s collaboration with Uber opens new doors for e-commerce

Walmart will launch a drone delivery pilot this summer

Previous Can NC reopen North Wilkesboro Speedway?
Next Top 10 Best Vtech Electronic Drum Kits 2021 - Bestgamingpro