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Target Plans to Keep Spending Big On Its Stores

By Daniel B. Kline - Mar 2, 2020 at 12:49PM

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The company now expects to spend $9 billion on capital improvements.

Brick-and-mortar chains that don't invest in their stores, supply chains, and digital capabilities eventually go out of business. That's a concept Target's (TGT -0.54%) leadership fully understands.

The chain had originally planned to spend $7 billion over three years in its stores, supply chain, and technology. That number has increased to $9 billion, according to new CFO Michael Fiddelke in a recent Star Tribune report.

Three workers in a Target.

Target has been renovating many of its stores. Image source: Target.

What is Target doing?

The chain's strategy has involved multiple things including company-owned private label brands, buying Shipt to offer same-day delivery, improving its supply chain, going full omnichannel, and revamping its stores.

Target's store revamps are not minor; the company tailors each rebuild for the market where the store operates. For example, locations with significant foot traffic (as opposed to areas where people drive) may have grab-and-go items near the front or may offer fewer large-size products.

"That's the thing that we think has driven our success and so we'll continue to keep an eye out for what are the right places we can continue to invest," Fiddelke said.

Stay on Target

The new CFO called the strategy "playing offense." It's really just an effort to aggressively keep up with the times. These days, consumers don't have to visit a store to shop, so a successful brick-and-mortar chain needs to make any visit it gets from customers valuable while also offering fast, efficient, and affordable (usually free) digital options.

Target has succeeded in doing all of those. This latest move shows that the company remains committed to keeping pace with its top rivals (and leaving stagnant retailers behind).

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