Given the ongoing global COVID-19 pandemic and government orders for many in the U.S. to limit activities to essential ones only, consumers are likely to favor stores that are taking more health and safety measures. People have become vigilant about measures to avoid contracting the virus, and this likely carries over into shopping habits. While consumers will still need to stock up on essential goods such as groceries and household items at this time, they'll likely look to stores that make them feel safer and are working to prevent exposure to the coronavirus.
Target (TGT -0.54%) recently announced formal measures to create a safer shopping environment for its customers and staff. This could help the retailer from a revenue perspective if shoppers perceive it to be a safer, cleaner place to shop as U.S. consumers navigate the current health crisis.
Image source: Target.
Target is protecting its employees and customers
Target's current safety and cleaning measures during the pandemic will hopefully encourage customers to return to its stores post-pandemic. Even after the quarantines and distancing measures are lifted, people may still have fears around contracting the virus in public places. Stores that are putting more safety measures in place will likely see more foot traffic in a post-COVID world.
Starting on April 2, Target began giving protective gear (gloves, masks) to employees at the start of shifts. The eighth-largest retailer in the U.S. is also implementing safer shopping measures to protect both shoppers and staff from the COVID-19 virus. These measures include plexiglass shields in checkout aisles, limiting the number of people in stores to allow for social distancing, and increased cleaning measures. This move is positive for Target as a leader in protecting both its staff and shoppers. By contrast, competitor Amazon has been subject to protests from employees demanding better protective health measures.
The retail company's proactive measures are being echoed by Los Angeles law. On April 10, face masks were made a legal requirement for customers visiting essential service stores. Workers in grocery stores and other essential services establishments are also required to wear protective face coverings to help stop the spread of COVID-19.
Target also put in measures to improve the wellbeing of its employees. In mid-March, the company raised the hourly pay by $2 an hour for store and distribution center members until at least May 2. The big-box company started offering some team members paid leave for COVID-19-related issues, as well as bonuses for store team leads in March. The better treatment of its employees will boost the brand in the eyes of shoppers, particularly millennials and Gen Z shoppers who have indicated in surveys that they attach more significance to how companies treat employees.
In an interview with Just Capital, billionaire investor Mark Cuban claimed:
If you get branded as a company that acted in bad faith, laid off all your employees, or really cut back and you took a bonus or whatever, you're going to get crushed and your brand is going to go straight into the toilet.
Setting itself up for success after the COVID-19-related quarantines
Target's stock has traded down about 15.9% since the start of the year, vs. the S&P 500's 12.3% decrease over the same time frame. While there are ongoing concerns with retailers' performances in the current environment given the uncertainty around a drastic decrease in consumer spending, Target's revenue will be supported by its consumer staple offerings during a slowdown. As of March 25, the Minneapolis-headquartered retailer saw overall comparable sales increase by 20% year over year, with essentials and food & beverage up 50% during the same period. Target should also benefit from its affordable offerings.
Target's safety measures and better policies for its employees should help bolster its results during the current slowdown. Consumers are likely going to feel better about shopping at stores that are taking more precautions to create a healthier environment that's safer for both staff and shoppers. After the pandemic subsides, Target will have also created goodwill with the community that will benefit the brand.
