In this blog commentary, Supply Chain Matters highlights the significance of broad merchandise retailer Target being cited as 2021 Retailer of the Year by an industry publication. He took five years of transformational effort and the affects of a pandemic to make such recognition obvious.

This week, grocery retailing trade publication Supermarket News cited U.S. based retailer Target as the 2021 Retailer of the Year for its omnichannel and store innovations, robust grocery offering and outstanding financial performance.

The granting of such a citation is newsworthy for the supermarket industry but keep in mind that Target is a broad-based general merchandise retailer that has to compete with other large retailers. More than that, this retailer’s bold transformation has been a distinctively different Omni-channel strategy that has placed physical stores at the center of customer fulfillment regardless of order channel. CEO Brian Cornell often references Target’s “stores as hubs” customer fulfillment strategy that began five years ago as many retailers were challenged with how to deal with the emergence of pure play online retailers.

Supply Chain Matters has drawn reader attention to this bold strategy, particularly in the decision to fulfill all physical in-store and online orders from the retailer’s nationwide retail stores as opposed to separate, dedicated customer fulfillment centers stocked solely for online order volumes.

In prior blogs focused on the retail industry, we have highlighted retailers that were able to significantly benefit from the COVID-19 pandemic because of their investments in online customer fulfillment and digital business processes. A further theme was benefitting by being an online one-stop presence for deemed essential goods that could be garnered with safety and convenience in-mind. In a blog published in September of 2020 commenting on Target’s monster quarterly financial and operational performance, we observed that supply chain management professionals sometimes do not get the time to reflect on how organization’s reached certain points in an overall journey toward business transformation. Further, there are the notions that transformation does not occur in a manner of several pilot initiatives but rather a lot of invested time, thinking and collective leadership. In the specific case of Target, it was a multi-year year journey that challenged traditional industry supply chain thinking. Like many transformational efforts, there was the recruiting of transformational supply chain leaders such as former Amazon executive Arthur Valdez as Chief Supply Officer who in turn recruited other transformational leaders. There were resets and adjustments, but the end goal remained consistent.

The SN rite-up of the award indicates that Target managed to build on its 2020 gains while other grocery retailers experienced flat or negative year-over comparisons from 2020 to 2021. The overall sales growth momentum has continued in the first half of this year. Spurring growth has been increased investments in the retailer’s Good & Gather private brand described as an affordable, better-for-you line of products

Perhaps the most insightful and telling quote from Cornell was the following:

When we began this journey, we didn’t know we would be facing a global pandemic, mass quarantines, rapid unemployment and the need to limit the number of people in public spaces and yet, when those threats emerged in 2020, we were ready. And without hesitation, millions of American families turned to Target like never before. That happened because of decisions we made four and five years ago.” He further noted: “The capabilities we built to become America’s easiest place to shop also cracked the essential question of how to grow our digital sales exponentially, while maintain the overall profitability of our business.”

Such statements speak for themselves and for counter industry new thinking. Once more, as other retailers are forced to close stores Target is adding multi-purpose stores

The takeaways for readers remain that business transformation is not solely a technology or automation led effort. Rather, it results in challenging traditional thinking and business practices. It includes a laser-focus on customers and their specific needs, re-thinking how processes and decision-making can be performed with added intelligence and speed and at the same time exceeding overall business financial and operational objectives.

Tip of the Hat Recognition

Our Supply Chain Matters tip of the hat recognition is directed at Target and its recognition for being SN’s 2021 Retailer of the Year.

 

 

 

 

 

 

 

Bob Ferrari

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