How Target Is Taking Market Share From Its Competitors in a White-Hot Consumer Environment

It’s a good time to be a retailer, but it’s a great time to be Target.

The big-box chain proved on Wednesday that it can blow its competitors out of the water even during high tide for the industry overall, reporting “unprecedented” traffic growth and surging digital sales for the second quarter of 2018.

“There’s no doubt that like others, we’re currently benefiting from a very strong consumer environment, perhaps the strongest I’ve seen in my career,” said Target CEO Brian Cornell on a call with analysts and investors.

Traffic for the quarter was up 6.4 percent year over year, the strongest growth the company has seen since 2008. Digital sales grew 41 percent, after swelling 32 percent a year ago, while comparable store sales increased 4.9 percent.

But while high consumer confidence and shoppers’ tax cut-padded wallets certainly contributed to the strong quarter, not every retailer is seeing the same blockbuster financial results — just look at the dire straits JCPenney for proof. To explain why Target has managed to get ahead of the pack, Cornell pointed to the investments the company has made in remodeling its stores, keeping everyday pricing low and communicating clearly with its customers — all of which it’s been able to do thanks to solid long-term decision making.

“I think what you’re seeing right now from a macro basis is well-run retailers with strong balance sheets that generate cash that they can invest back in their business. [They] are winning right now,” said Cornell. “And there’s obviously others right now that can’t afford to invest in their store experience or build capabilities or drive differentiation. And they’re giving up share. So there’s clearly winners and losers. We certainly think we’re migrating to the winners column … we’re taking market share in all of our major merchandising categories.”

While digital sales are no doubt important, he also pointed out that “on any given day, 90 percent of retail sales are done in physical stores.” And, as evidenced by today’s results, Target appears to be making the most of its more than 1,800 locations.

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