To improve sales, profitability.
Wesfarmers has confirmed plans to reduce Target floor space by around 20% as the department store division focuses on improving sales and accommodating shopper behaviours. Target has a store network of 305 stores around the country.
“As leases expire, our network plan will see some 20% of floor area removed from our portfolio, dependent upon trading performance and competitor dynamics,” department store CEO and Target managing director, Guy Russo (pictured) said.
“We are focused on reducing unproductive space and delivering an engaging online experience. As part of this, we expect over time that store sales will partly and progressively migrate online. We do expect store sales density to improve as we remove unproductive space.
“We continue to refine our store network plan…On annual basis, we review the distribution of selling floor and store formats across the country. Over time, we expect our Kmart store network to grow and our Target network to reduce. Overall for department stores, there will be some modest growth in selling floor area.
“In creating Target’s network plan, we have focused on individual site assessments, looking at financial materiality and catchment attractiveness, online proposition relevance and overall value creation for department stores,” he continued.
Acceleration of online, store renewal trial
Target has made good progress in resetting its online proposition which continues to grow strongly and is now more profitable, according to Russo. More recently, the department store improved availability of product ranges, launched AfterPay, increased store fulfilment to reduce delivery times and improved the overall shopping experience.
“We will also improve our website with enhanced design and content, as well as increased personalisation. We are also committed to delivering a more productive and convenient click and collect and we are making investments in store mobility and digital payments,” Russo said.
Target will continue to progress its store renewal trials and although the trials have been positive, more validation is required before capital is allocated to a broader renewal program, he said. “We have also recently commenced resetting space to our blueprint – our 50 largest stores focused on improving sales density through space allocation and product adjacency, bringing women’s, kids and home to the front of the store.”