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Target's Retail Innovations Could Shine as Coronavirus Spreads

By Travis Hoium - Mar 16, 2020 at 12:00PM

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Target hasn't succeeded in e-commerce, but it may be able to offer valuable services to serve customers in a time of crisis.

The retail industry has gone through an upheaval over the last two decades -- e-commerce has ballooned to over 11% of all retail sales in the U.S., and shoppers now expect more from their local retail shops. Target (TGT -0.47%) has been disrupted just like everyone else, and has gone from being a retailer with a seemingly wide moat and steady growth to a target of e-commerce giant Amazon (AMZN -2.49%) in everything from book sales to groceries. 

A lockdown of most businesses across the U.S. may seem like a time for e-commerce to shine, but Amazon is facing product shortages just like other retailers, and it relies on third-party sellers who may be on lockdown too. The opportunity for Target is to show that its brick and mortar footprint is still valuable, and that new Drive Up and Shipt delivery services can fill a big need for consumers today. 

Rendering of new Target store in California.

Image source: Target.

Retailing with social distance

When Target launched Drive Up, I thought it was a great innovation for busy shoppers who needed items more immediately than Amazon's standard 2-day shipping. As parents, my wife and I began using the service to get shopping done when our son was with us, or to pick up a few items on the way home. Shopping with a toddler is a challenge on a good day, but if they don't have to get out of the car it becomes a breeze. 

Today, the reality is that millions of shoppers don't want to even enter the store. Shopping carts, check-out lanes, and even store shelves could be places to spread the coronavirus, so avoiding going in at all is ideal. That's where Drive Up becomes so valuable. This weekend I literally drove up to the designated door at my local Target, an employee walked over with two bags of products, and off we went. It's an innovation we'll use more than once over the next few weeks, and fills a huge need for immediate goods and services while avoiding crowds. 

Bringing Target to you

Target's Shipt service could also be valuable for those who need groceries or other retail items delivered in a timely manner. And it doesn't just deliver goods from Target -- it delivers office products, items from Petco, and even some CVS Pharmacy products.

This isn't the only delivery service that consumers can turn to, but if Target becomes a go-to local shopping option it could push the delivery service to the forefront of shoppers' minds. And that could help build a delivery business that's built to last long-term. 

Coronavirus's potential impact on Target

Given what store shelves look like today, I have no doubt that Target will be a financial beneficiary of the desire to stock up in case we're all on lockdown for the next month. But this crisis may also introduce valuable everyday retail innovations that Target has been building out for years. It's an opportunity for those innovations to shine. 

I expect Drive Up lanes to be fuller than they've been in the past, and more customers to give Shipt a shot. If they perform well, Target may come out of this crisis better than it went in. And it could be a top-performing stock in 2020 as a result. 

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